Don't we need regulation?

I was taught, through the lens of the Great Depression and the so-called progressive era, that the nation learned the virtues of moderation and threw off the shackles of the dangerous laissez-faire experiment with social programs and government "regulation" of industry and markets.  I was taught that our "mixed" economy was a harmonious compromise between greed and restraint.  I inferred that greed was powerful and functional; a little greed was good but too much was dangerous.  The corollary of course is that a “reasonable” amount of profit is ok, even good, but too much is bad, even evil.  The conclusion to this line of thinking is that “regulation” of industry is necessary and justified, even if it is cumbersome and costly.  What I have learned since about the historical narratives told in any venue is that they do little more than to demonstrate the preconceived notions of the narrator.  I now see the story as fantasy and the conclusions as false.

Regulation is neither morally justified nor necessary.  Less fundamental but more obvious, it has a demonstrably poor track record of efficacy.  The fact of human nature is that people trade.  Some are honest, others are not and the rest of us play for either side at one time or another.  The situation an individual is in greatly influences his/her propensity to dishonesty.  The existence of systemic protections creates moral hazards resulting in ignorant consumers and unscrupulous marketeers.  Responsibility in a broader field of things is shifted to the bureaucrat who has less incentive and less specific knowledge to make appropriate decisions in real time.  Further, the conundrum arises, as immortalized by Dr. Seuss, “Who will watch the bee watcher?”





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