Thursday, May 6, 2010
Monday, May 3, 2010
Regulation and Moderation
Right now Congress is debating new regulations for financial institutions, and there are conservatives out there who think the very idea is wrong-headed.
I'm going to take the moderate approach. I also think it's the traditional conservative stance.
The conservative approach to the economy is largely "hands off." Businessmen know how to run their businesses far better than politicians. When people who know nothing about the private sector start making rules, they can bog businesses — and the economy — down by making innovation and growth more expensive than it would otherwise be. If the government will get out of the way, the free market will take care of itself.
Under one condition, that is.
Traditionally, conservatives recognized that free markets — and democracy — only work when coupled with morality. Humans will always sin, but there have been ages when common decency was a bit more common. And there have been times when greed surpassed good sense.
For example, monopolies are not inherently evil. But the 19th century monopolies became problems when they realized they could do whatever they wanted and then did just that.
In modern America we've reached a point, hopefully temporarily, when corporate officers see their good, the good of the company, the good of the shareholders, and the good of the customers as four distinct things. And they see their own good as the primary concern.
While we can't ignore the government's role in the collapse of the financial market, we shouldn't exaggerate it either. A whole lot of people did some awfully stupid and selfish things, assuming that they wouldn't be the ones left holding the bag. They've shown us that they cannot police themselves, so we're going to have to do it for them.
But that doesn't mean we should let the left do whatever crosses their beady little minds. Before we accept new regulations, we should consider a few things:
1) Was lack of enforcement of existing rules a factor in the collapse?
Government, but the left more than the right, loves to make new rules when the old ones were never enforced properly. This only adds burdens without creating any actual security.
2) Power corrupts.
There are stupid, greedy, and power hungry people in government, too. And there are good people who are simply overzealous. And there are people who don't have a clue what they're doing. New regulation should be added slowly and carefully with as much oversight on the regulators as the regulatees.
3) Less is more.
We have to have rules, but it's all too easy to overburden the private sector economy. Life is risk, and we'll never remove all the chance of another stupidity fueled collapse. Trying to do so will only prevent our economy from getting back up to full speed. But wasn't the "speed" part of the problem? Yes, but everybody's been burned pretty darn good; I think we can err to the side of liberty. In general, I think it's always preferable to err a little to the side of liberty.
4) Think out of the box.
Is "regulation" the only way to go? Is there a way to raise the costs of failure in such a way as to discourage insane gambling? Without adding to the cost of business? For instance, what if a corporate bankruptcy required the CEO and directors to forfeit 50% of their personal assets? Might jail time be appropriate for future failures of the magnitude we've recently seen? Replace golden parachutes with orange jumpsuits and see what happens.
All talk of regulation isn't bad. I applaud the GOP for working with the Democrats to make better regulation rather than just sitting in the corner so they "can't be blamed" for whatever insanity the Dems come up with. If we're careful, we might just all live through this.
I'm going to take the moderate approach. I also think it's the traditional conservative stance.
The conservative approach to the economy is largely "hands off." Businessmen know how to run their businesses far better than politicians. When people who know nothing about the private sector start making rules, they can bog businesses — and the economy — down by making innovation and growth more expensive than it would otherwise be. If the government will get out of the way, the free market will take care of itself.
Under one condition, that is.
Traditionally, conservatives recognized that free markets — and democracy — only work when coupled with morality. Humans will always sin, but there have been ages when common decency was a bit more common. And there have been times when greed surpassed good sense.
For example, monopolies are not inherently evil. But the 19th century monopolies became problems when they realized they could do whatever they wanted and then did just that.
In modern America we've reached a point, hopefully temporarily, when corporate officers see their good, the good of the company, the good of the shareholders, and the good of the customers as four distinct things. And they see their own good as the primary concern.
While we can't ignore the government's role in the collapse of the financial market, we shouldn't exaggerate it either. A whole lot of people did some awfully stupid and selfish things, assuming that they wouldn't be the ones left holding the bag. They've shown us that they cannot police themselves, so we're going to have to do it for them.
But that doesn't mean we should let the left do whatever crosses their beady little minds. Before we accept new regulations, we should consider a few things:
1) Was lack of enforcement of existing rules a factor in the collapse?
Government, but the left more than the right, loves to make new rules when the old ones were never enforced properly. This only adds burdens without creating any actual security.
2) Power corrupts.
There are stupid, greedy, and power hungry people in government, too. And there are good people who are simply overzealous. And there are people who don't have a clue what they're doing. New regulation should be added slowly and carefully with as much oversight on the regulators as the regulatees.
3) Less is more.
We have to have rules, but it's all too easy to overburden the private sector economy. Life is risk, and we'll never remove all the chance of another stupidity fueled collapse. Trying to do so will only prevent our economy from getting back up to full speed. But wasn't the "speed" part of the problem? Yes, but everybody's been burned pretty darn good; I think we can err to the side of liberty. In general, I think it's always preferable to err a little to the side of liberty.
4) Think out of the box.
Is "regulation" the only way to go? Is there a way to raise the costs of failure in such a way as to discourage insane gambling? Without adding to the cost of business? For instance, what if a corporate bankruptcy required the CEO and directors to forfeit 50% of their personal assets? Might jail time be appropriate for future failures of the magnitude we've recently seen? Replace golden parachutes with orange jumpsuits and see what happens.
All talk of regulation isn't bad. I applaud the GOP for working with the Democrats to make better regulation rather than just sitting in the corner so they "can't be blamed" for whatever insanity the Dems come up with. If we're careful, we might just all live through this.
Subscribe to:
Posts (Atom)
