Regulation worked before and will work again. see what deregulation has wrought, along with poor economic policies of the Bush administration. Vote Obama. jenius
On Oct 15, 3:27 am, "M.A. Johnson" <[EMAIL PROTECTED]> wrote: > The Reregulation MantraJohn Stossel > Wednesday, October 15, 2008 > "It's deregulation's fault!" > That's the conventional explanation for the economic mess.Barack Obama said, > "This is a final verdict on the failed economic policies of the last eight > years ... that essentially said that we should strip away regulations, > consumer protections, let the market run wild, and prosperity would rain down > on all of us." > Is deregulation is the culprit? It can't be. There was no relevant > deregulation in the last 25 years. Meanwhile, highly regulated institutions > eagerly bought risky government-guaranteed mortgages, stimulating excessive > housing construction and an unsustainable price bubble. > Deregulation wasn't the problem, and reregulation isn't the solution. > It's intuitive to assume that regulation prevents problems, but it's rarely > true. First, how would regulators know what to do? Leaving aside the bias > they might have and the brutal fact that regulation is physical force, how > can a small group of people understand the workings of a market sufficiently > to regulate sensibly? Markets, especially financial markets, are far more > complicated than any mind can grasp. They consist of many millions of > participants making countless decisions on the basis of unarticulated > know-how and intuition. To attempt to regulate such activity requires > knowledge no one can possess. > To seriously regulate those markets you'd have to impose the "precautionary > principle," a favorite idea of some environmentalists, especially in Europe. > The principle prohibits any product or activity not proven 100 percent safe. > It sounds so reasonable.But Ron Bailey of "Reason"points out what it really > means: Don't do anything for the first time. > Bad idea. The world needs innovators and inventors. We need people who try > things for the first time. > Nobel Laureate F.A. Hayek emphasized that government planners suffer from a > "knowledge problem" because "the knowledge of the circumstances of which > [they] must make use never exists in concentrated or integrated form but > solely as the dispersed bits of incomplete and frequently contradictory > knowledge which all the separate individuals possess." > In other words, the planner or regulator can't possibly know what the > multitude in a market "knows." So what regulators really do is straitjacket > market participants, preventing innovators from creating prosperity for us > all. > Another "Austrian school" economist, Israel Kirzner, applied Hayek's insights > to typical regulation, showing how it must interfere with the market's > discovery process, the profit-and-loss system that uncovers information vital > to making consumers better off: > "Even if current market outcomes in some sense are judged unsatisfactory, > intervention ... cannot be considered the obviously correct solution. > Deliberate intervention by the state not only might serve as an imperfect > substitute for the spontaneous market process of discovery; but also might > impede desirable processes of discovery, the need for which has not been > perceived by the government. " > Kirzner's point is that even if our problems are the result of market > failures -- and with so much intervention, how could they be? -- there is no > reason to believe that government could do a better job. Quite the contrary. > The relevance of his ideas to what ails the economy now should be clear. The > current interventions prevent market participants from adjusting to new > conditions. Banks might be willing to sell their shaky loans to investors at > a steep discount, but why do that if the government might bail them out? Why > not wait to see if you can get a better price? With the politicians > constantly changing the details of the bailout, selling at a discount today > might get you accused of fiduciary malpractice later. > Uncertainty over what further new regulations may be imposed only stifles the > market's search for solutions. > Markets are never perfect. They are made up of people making their best > judgments, and people's judgments are never perfect. Yes, under some > circumstances market activity such as speculation and short-selling could > harm innocent bystanders. But those who say government is the best protector > are wrong because the knowledge problem is an insurmountable obstacle. > There is only one genuine protection for the public: the discipline of profit > and loss. Nothing concentrates the mind like the prospect of > bankruptcy.http://townhall.com/columnists/JohnStossel/2008/10/15/the_reregulation_mantra --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
