Inkwell Institute
Federal Budget/Deficit Series
There is a big debate in Washington and among the radical Left and Right on whether financial regulation will work or not…..and a question that deserves an answer….something we will not get from the pundits and their minions…..
This, of course, is just my opinion….but I think it is a pretty good answer, but then I am biased…..
It is obvious that left to their own devices corporations will NOT do the right thing or control and regulate themselves…..look at Wall Street…..look at the oil spill….look at the health industry….look at….oh well you get my point I believe…..
I know…I know there are those that do not like the direction that our government size is going….and I agree, somewhat, to what is being said….but (there is always a but)…..something has got to be done…..if not then these types of disasters will continue on a rapidly expanding pace…..
Paul Krugman made some intersting points in his blog on regulations…..
Well, here’s the thing: regulation demonstrably does work where tort law doesn’t. Consider the environmental issue: in reality, the perpetrators of oil spills never pay most of the cost; but in reality, environmental regulation has led to much cleaner air and water. (Look up the history of Los Angeles smog or the fate of Lake Erie if you don’t believe me.)
So why does regulation work? If polluters can buy off the system ex post, after a disaster, why don’t they manage to totally corrupt regulation ex ante? There’s a lot to say about that, and I’m sure there’s a literature I haven’t read. But one thing we tend to forget in this age of Reagan is the importance and virtues of a dedicated bureaucracy: when you have professional government agencies with a job to do, and treat them with respect, that job often gets done.
While Krugman is speaking mostly of the oil spill and regulation….it can be said that federal regulation does work for the areas that I have mentioned above……
While I agree with Krugman on the main point, I also see where regulation can be compromised by the influx of massive amounts of cash to the regulators from the businesses being regulated.
There is the conundrum of regulation……Greed can neutralize much….
Krugman mostly (IMO) talks a load of bollocks. The trouble is that government and bureaucracy mostly consists of second and third rate people – if they weren’t that, they’d be out in the real world, doing their thing and making a proper and useful living and contribution to society.
With second and thrid rate people running regulation, how the hell can you even dream it will work for the benefit of the majority?
I have ideas and I do believe that you can “trap or force” corporations into doing what you want without vast bureaucracies to try (and fail) to do that. However, that’s not really my point…
My point is simply this in answer to the question posed in you title: Bureaucratic driven and managed regulation simply DOESN’T work – almost ever – so we need an alternative – a better way of some sort – whatever it may turn out to be if and when we find it…
I like him somewhat……after all he is Keynesian…..I will agree….but (there is always a but) until a good solid alternative is found…I believe we need to regulate, at least some of the stuff, like financials and health, because these guys have been stealing the American people blind……
In my opinion, so long as we keep trying to improve regulation then we are just kidding ourselves, but then if you don’t believe in the Keynesian stuff (which I don’t) then I guess you feel less obligation to be believe in legislation as an answer.
We in the UK actually had quite a good government run health scheme free at the point of delivery to ALL – that’s until Governments tried to centralise it all. Since then, the cost has more than doubled with the addition of a HUGE amount of extra bureaucracy and the service has got worse!
True to a certain point…..,but all this regs now are nothing more than a carrot to the people…….as I have said many times…..tweaking is all they do…there has been NO serious reform in 50 years…that is why I was not Obama fan and wrote that the change everyone wanted was just BS…..look at the financial reform (post to come) started off as reform winds up as a huge waste of time because not much will change int passing of the bill……basically, re-instating Glass-Steagall would have done more than anything these dipsticks are working on now….
There needs to be regulation at some level. Corporations are only interested in maximizing profit (as they should). Occasionally, that will come into conflict with the liberties of People. For example, the use of SLAPP lawsuits to keep people from talking about a company’s misdeeds.
Now, the big question is where do you draw the line. I think that the line needs to be drawn where regulations are reasonable and ensure that the market is a close to being free as humanly possible. Regulations, such as informing borrowers what the true costs of a loan and oil companies needing to have a contingency plan for offshore drilling, are reasonable.
As a side note… in your tags, it reads “Sarah Palin sexual intercourse strikes the GOP”. Did you do that on purpose? 👿
Like I have said, Glass-Steagall could have prevented some of the probs we have now in the economy….but Banksters will find a way to cull more profits with little to no actual investment……I will agree with Quin in a way, a new system needs to be found, this one is seriously flawed…
Which poisat has the tags you mentioned…I could see them on my side?
Actually, I think the best regulation would have been to say sorry guys but no bailout and then prosecute the ones who committed fraud (not this civil thing they are doing). The whole culture of bailing out companies has created an atmosphere where companies like Goldman Sachs will do what they want know that their Uncle Sam will save their ASSets.
I was talking about the tag widget in the left column… the string is composed of what looks like to be four tag. :>
I agree completely….when Glass-Steagall was repealed it allowed GS and the others to do this form of gambling. I also agree with the prosecute thing also…after all their gambling ruined many people financially…..Have you checked out this site? I added them to my blogroll…..
http://www.banksterusa.org/
It just worked out that way in the Tag Cloud…cool, huh?
Yes. I agree with Terrant. There does of course need to be some regulation, but as I’ve said before KISS and there will be a lot less loopholes to wriggle through.
Also I agree 100% – NO BAILOUT – EVER! and always prosecute to the fullest extent (which brings us back to keeping the laws simple)!
Keeping laws simple? When lawyers make them?
Well, exactly! Just scrap about 70% of them and redraft the rest in normal language and no more than one A4 sheet long!
The idea is a good one so that means that it will be ignored completely….sorry…..
Oh, I agree. That is to be expected… 🙁