Title: ORourke1 Signature
Hello Ernie,
The first sentence you highlight means that there is a revolving door
between the regulators and the regulated. Kind of like the Democratic
and Republican regulators go into the business world in the companies
that they used to regulate. Or vice-versa. Like Tim Geitner used to
work for Goldman Sachs, and now as Treasury Secretary he regulates
Goldman Sachs. But there's no conflict of interest here, move along
now.....
Like the UAW being part owners of Government Motors and Chrysler as
well as their unionized workforce. What will the UAW demand of
companies that are not partially owned by the UAW? More benefits and
money so as to make them uncompetitive? Probably. How did the UAW get
into this position? By having bought the Democratic party.
So are the regulators, reporting to a Democratic President through
various Democratic appointed officials, really going to "oversee"
things for the benefit of the Democratic Party, uh, I mean the PEOPLE?
(The PEOPLE? Yeah, right, pull the OTHER finger.) If the regulators are
corrupt, the regulations are not evenly applied and don't mean crap.
"Pay to play."
Hence the article was written about "Crony Capitalism." I get some WSJ
e-mail with some of the articles linked. Like this one.
David
"Anyone
who thinks he has a better idea of what's good for people than people
do is a swine."--P.
J. O’Rourke
On 4/20/2010 3:33 PM, Dr. Ernie Prabhakar wrote:
Hi Billy,
I know you probably know and agree with all the arguments I'm
going to make, but I feel compelled to spell them out...
Public choice theory has identified the root causes of
regulatory failure as the capture of regulators by the industry being
regulated.
Except, the libertarian argument is apparently that the root cause of regulatory
failure is the *existence* of regulations, and that the only necessary
and sufficient solution is to simply eliminate regulation altogether.
Piling on more rules and statutes will not produce something
different than it has in the past. Reliance on affirmative principles
of truth-telling in accounting statements and a duty of care would be
preferable. Deregulation is not some kind of libertarian mantra but an
absolute necessity if we are to exit crony capitalism.
I agree that Sunlight is probably the best infectant, but it is
hardly the only one. The empirical reality is that humans make
irrational choices all the time, and therefore simply providing
accurate information doesn't solve all your problems. The reality is
that regulation does have a non-trivial cost, but it also provides a
non-trivial benefit.
There is surely a case for reforming our regulatory environment,
because of the valid issues raised here. But the libertarian "solution"
is a simplistic and problematic as the statist solution of creating
*more* regulations. We really need some fresh, healthy, data-driven
alternatives.
-- Ernie P.
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