Wednesday, September 17, 2008

The Magic Wand of Regulation

First came the federal bailout of Freddy Mac and Fannie Mae, and now comes the news that the Federal Reserve will help to bail out failed insurance giant AIG. Like 99% of the American people, I'm not in finance, nor do I know anything about finance, as regular readers will remember past proclamations of ignorance. I don't want to weigh in on good or bad because the truth is I have no earthly idea.

One thing I do know is I've seen more and more calls from the left for more regulation. Now, 99.99% of the people calling for more regulation may not know just what regulation we actually need, but that doesn't stop them from asking for it in the first place. I'm not briefly blogging on the subject to be Mr. Big Libertarian and blame all the financial sectors problems on regulation- I only want to point out that for far too many people, regulation is a magic word that cures all evil, when the truth is, it's unclear what regulation could have done to prevent the woes of the financial sector in the first place.

Anyone who works in a regulated industry can tell you that regulations matter- that is, specific regulations have specific impacts. For even simple, agreed-upon goals, crafting regulations to achieve those goals is difficult work. Based on the libertarian lens through which I've viewed my own experiences, the real problem of regulation- of all regulation- is that it's often very costly without actually doing what it sets out to do. When I harp on regulation, the point isn't to demand that all regulations be eliminated, it's only to point out that specific regulations should be carefully crafted and weighed on their relative merits. Simply saying "we need more regulation" isn't a solution. The biggest problem I see with the financial sector is there seems to have been mistakes made by both the government and the private sector. The thing is, the mistakes of the private sector seem more clear, and those mistakes are played out through these massive collapses we've been witnessing. But the mistakes of the government? Saying deregulation was the problem in a still highly regulated industry doesn't really help. The truth is, I've heard very little about what the government should have done specifically to avoid the collapses we're seeing today, yet still, the call comes out for more regulation.

Some folks on the left like to use the term "reasonable regulation." And that's just fine. As soon as you figure out what's reasonable, you can let the rest of us know. Until that point, I'd rather not hear about the magic wand of government regulation.


Anonymous rose said...

Perfectly summed up.

The government will now regulate to make sure speculation and cheap money can never cause another housing bust. As if that needs to be regulated now. I think after Bear and Lehman the investment banks get it now.

So they'll go regulate with the aim of preventing something that will never happen again and in all likelihood cause the next big problem. What will it be? My guess, European style GDP growth and unemployment.

You see mccain get ripped because fiorina said neither he nor palin could run a fortune 500 company? hahahhahahaha, mccain, palin, biden and obama, or bush clinton and bush sr., or pretty much any president we've ever had is as qualified to run a large company as mcmc is to fight brock lesnar for the UFC championship.

11:28 AM  
Blogger lonely libertarian said...

How true. Nor do we ultimately want a CEO-type as the leader of the free world.

1:47 PM  
Anonymous rose said...

It's unfortunate that the political environment, aka rampant class envy promoted by Obama, prevented Mitt Romney from being McCains VP. It would be nice to know there is someone in the white house who has any fucking clue what they're talking about. Because listening to McCain and Obama talk about this over the last couple days has made me sick.

At least McCain admitted he doesn't know anything about the economy. It's scarier to know that Obama on the other hand thinks that he in fact is an economist.

If Biden and Romney debated and it turned economic, Romney could've made Biden look like the chick from south carolina or whatever at the Miss America pageant.

1:59 PM  
Blogger lonely libertarian said...

This is exactly why this election scares me, particularly with the current economic situation. I did have some problems with Romney- his health care plan in Mass. is a disaster- but at least the guy seemed somewhat knowledgeable.

The scariest part is that with both of these guys, I'm just not sure what we're going to get.

2:26 PM  

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