Friday, October 1, 2010

On Regulation


GROWING OUT OF A DISCUSSION with JOHN MOORE at A DAY IN THE LIFE OF...

Re-regulation cannot be the solution, because we thought de-regulation was the solution.

Here's what I mean: If we restore all the regulation we had when times were good, this will not solve the problem, because times went bad even with all that regulation in place.

Back then, we thought we could improve things by eliminating the regulation. It didn't work.

In short: Regulation didn't prevent things from getting worse, and deregulation didn't prevent things from getting worser. So there must be some other problem, something other than the state of regulation. (That other problem is the focus of this blog.)

Apart from that, since regulation obviously was not the problem to begin with, and since it did amazing things (see the first graph in this PDF) for our economy, I agree with those who wish to reinstate regulation.

But remember, restoring regulation can (at best) only help stabilize the economy. It won't fix the problem.

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