via Mark Thoma, 6/7:
...it’s hard to think of a recent disaster ... that wasn’t abetted by inept regulation. Mining regulators... Financial regulators... The S.E.C... These failures weren’t accidents. They were the all too predictable result of the deregulationary fervor that has gripped Washington in recent years, pushing the message that most regulation is unnecessary...
The obvious problems of graft and the revolving door between government and industry, in other words, were really symptoms of a more fundamental pathology: regulation itself became delegitimatized... This view was exacerbated by the way regulation works... Too many regulators, for instance, are political appointees, instead of civil servants. ...Congress, meanwhile, often takes a famine-or-feast attitude toward funding. ... This ... also contributes to the sense that regulation is something it’s O.K. to skimp on.
...reforming the system isn’t about writing a host of new rules; it’s about elevating the status of regulation and regulators. More money wouldn’t hurt: ... If we want our regulators to do better, we have to embrace a simple idea: regulation isn’t an obstacle to thriving free markets; it’s a vital part of them. (My bold/italics).
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