Sunday, May 8, 2011

Elevator Speech #8--The role of regulation

After each round of recent economic deregulation, there has been some form of catastrophe.  While regulations in general are often annoying and counter-productive, it is obvious after 35 years of economic deregulation that the folks who wrote the original regulations were on to something.  The ultimate proof that the economy needs regulating came in 2008 when the richest firms on Wall Street became the biggest national social welfare cases.  $Trillions had to be pumped into a system that had destroyed itself playing games with electronic money.

On the other hand, our government which cannot prosecute some of the most evil people to have ever walked planet earth can find the time and budgets to incarcerate hundreds of thousand of people for the "crime" of smoking pot.

Our government, for whatever reasons, has it completely backward.  The crimes that should have the highest priority are the ones that affect the greatest number. Crashing the economy on 2008 through naked and systemic fraud is certainly more important than finding a more peaceful way to get high.

The principle is simple.  A good government regulates the behavior of those whose actions affect many, while allowing almost complete freedom in personal matters such as sex and drugs.  Big=regulate. Small=deregulate.

Any financial institution that has economic backing from government agencies should be regulated like a public utility.  This is the absolute minimum requirement for a prospering real economy.  Any institution considered "too big to fail" has met all the reasonable definitions of a monopoly and must be regulated as a monopoly or broken up.

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