Personally I prefer my food to be healthy and not poisoned or contaminated and products that are reasonably safe which will not blow up, catch on fire or otherwise harm me or my children. Thus I’m all for some official (and effective) cultural/economic regulation as long as it doesn’t strangle the economy. I don’t care how competitive the marketplace is I’m not expert enough in enough things to sort through all the possibilities to always find a safe product or, for that matter, to determine if any particular product may be safe. As a practical matter after an incident it is to late and of little solace to discover the truth if your children are harmed (or killed), your economic livelihood destroyed or your heath ruined.

Unfortunately the problem with many regulations is that human nature gets in the way. Particularly greed and lust (e.g., power or sex) but also lesser human frailties such as incompetence, lack of omniscient, exhaustion, pettiness, peer pressure, pride, cultural myths and so forth. As a result no over-regulated activity in history has proved to be successful. In fact regulations are often detrimental resulting in the strangulation of the economy. From wall street to food inspections to import regulations to numerous other situations the current regulatory climate is so flawed that it is making things worse rather protecting us.

And why do we care? Well, aside from the obvious, bad regulations can destroy an economy. Without a strong and vibrant economy we’ll no longer have the resources to maintain and improve the quality of life. Without a strong economy there can be no effective health care. Without a strong economy there can be no strong military which will protect us. Without a strong economy we’ll not be able to maintain our infrastructure (e.g., roads, safe water supplies, energy, etc.). Without a strong economy there can be no stable society free from crime. Without a strong economy we will be unable to provide the vital social programs such as education or secure retirement benefits that an enlightened society wishes. Destroying our economy is worse than just destroying ourselves. It is also destroying our children.

Clearly we need effective regulations but the advocates of more regulation seem to have fallen into the same pit as the free trade advocates. Economists and idealists frequently propose and create regulatory systems based upon how they think things ought to be rather than how things are or likely to evolve. Perhaps even worse are the bad regulations deliberately proposed based upon some agenda driven by greed, power or the personal beliefs of a closed mind. In short because no flexibility is built in to account for basic human nature the system is badly flawed. The key is the term “effective” in effective regulation. Often current regulations are ineffective because they aren’t enforced.

For example, consider the recent financial meltdowns. There are adequate regulations already on the books but they aren’t enforced. Worse the regulators seem to have colluded with the crooks. For example consider the Bernard Madoff scandal. He was “investigated” no less than five times and each case exonerated after the SEC failed to perform even the most rudimentary inquiry in order to investigate their buddy.

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Tags: Economics, free trade, politics

This entry was posted on Tuesday, November 10th, 2009 at 5:11 pm and is filed under Economics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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