...here...when they say I just "want more regulation" or when they talk about how we had a ton of regulations on the books at the beginning of the financial crisis, so it couldn't possibly be related to insufficient regulation.
Regulation isn't a dial that you just turn up or down, people.
I especially liked this sentence: "We became a society of laws not based on whim or philosophy, but on hard experience with the discretion of even the most benevolent aristocrats."
I wouldn't be surprised at all if "insufficient regulation" was an issue; you aren't going to fix that under our current concept of regulation however. And I agree, clearly and publicly written laws and regulations would be great; we haven't had that in decades or more. Obscurantism is what we have instead. That means the "system" is more easily gamed and prone to all those evils that public choice folks talk about.
ReplyDeleteWhat we have in the good old USA is a heaping over bowl full of regulation theater.
I hardly think that it is a given that on balance we deregulated over the last thirty years. But something that people do not take into account enough is the regulatory dialectic. The private sector continuously makes regulations irrelevant as quickly as they are passed.
ReplyDeleteWilliam Roper: So, now you give the Devil the benefit of law!
ReplyDeleteSir Thomas More: Yes! What would you do? Cut a great road through the law to get after the Devil?
William Roper: Yes, I'd cut down every law in England to do that!
Sir Thomas More: Oh? And when the last law was down, and the Devil turned 'round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man's laws, not God's! And if you cut them down, and you're just the man to do it, do you really think you could stand upright in the winds that would blow then? Yes, I'd give the Devil benefit of law, for my own safety's sake!
http://www.imdb.com/title/tt0060665/quotes
Invisible Backhand
I'm surprised that Cochrane puts things like FAA rules in the same sort of category as laws. From my dealings with FCC it's not like that. The rules have many ambiguities and places where the regulator acts on their discretion.
ReplyDeleteWhen I dealt with FCC regulatory issues I found that one company (lets call it company B) consistently got favourable treatment from the FCC. So, when company B asked for clarification over a particular rule they would be given the most favourable interpretation of that rule, the rules often need clarification. Another company (let's call it company A) were given the opposite treatment.
As "increasingmu" says there is a regulatory dialectic - what would Marx think :) ? Both companies supplied the company I worked for. So, I funnelled all the questions I could through company B and the regulatory people of the company I worked for dealt with trying to hold the FCC to the decisions it had made.
These sort of rule based regulatory agencies have much more arbitrary power than Cochrane implies. Sometimes, for example, the FCC want to know if a component has come from a "reputable" manufacturer where they define which manufacturers are reputable.
In my experience the FCC didn't used their arbitrary power to persecute particular companies though. Mainly they used it to favour particular companies by letting the off minor problems that would have no practical significance but could technically be infringements of the regulations.
The British blogsphere love "A Man for All Seasons" and that bit gets quoted a few times a year, I'm a bit sick of it but it makes a good point.