I think you're oversimplifying the arguments for regulation. I don't
believe anyone involved in the process seriously believes regulation
is a one-dimensional parameter, and I think it's disingenuous to
suggest that supporters of plans that involve regulation that is
stricter overall are thinking that way. At the very best, that's a
straw man argument.
The measures that were most effective in the past year or so in terms
of containing progressive collapse were measures that were very
carefully strategically targeted at key elements of the overall
system, and the regulations being proposed now are equally
strategically targeted from what I can see. The fact that there's
more regulation overall, in those proposals, isn't a decision to "move
the dial" on one single parameter, it's more an artifact of the
process being regulated, one which, when left completely alone, tends
to evolve toward increasing instability and ultimately just the kind
of collapse we saw a year ago.
The market system is made up of people whose sole motivation is to
make more money and make money faster, and whose altruistic
motivations are far behind their motivations to get richer faster if
they're there at all, and often what altruistic motivations they *do*
have are overruled by the contractual obligations the corporations
they work for have to pursue every possible means of making a profit.
The fact that regulations designed to enforce a certain degree of
stability and the presence of certain fail-safes in the system that
prevent progressive collapse when rogue players do play fast and loose
is not a one-dimensional parameter at all, it's inherent in the nature
of the regulations that are, in fact, necessary to protect the market
system as a whole from the risky behavior of the people it's composed
of.
Never forget that you're dealing with a system made up of the
collective behavior of millions of individual human beings, because
that understanding is fundamental to the understanding of how the
system as a whole works and why it breaks down the way it does. It's
very efficient at what it does, but the nature of what it does is
itself chaotic, and that human element is the most chaotic part of it ..
On Sep 9, 2009, at 10:39 AM, John Williams wrote:
| The biggest myth is that regulation is a one-dimensional problem, in
| which the choice is either “more” or “less.” From this myth,
| the only reasonable inference following the financial crisis is that
| we need to move the dial from “less” to “more.”
There is a fundamental difference between the mythical imagery we
apply to reality and the reality itself. -- Me
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