The failure of regulation

No-one is willing to admit that more regulation is not the answer. We have plenty of regulation, of varying quality. But what is clear to the few who are prepared to look is that the authorities made exactly the same mistakes as the banks in this crash. They under-estimated the risks of securitisation and thought that securitisation reduced risk, nor is it likely that regulators will learn more quickly than the markets in the future. Despite this, regulators will be rewarded for this failure by having their empires made bigger and more powerful. No wonder “regulator failure” is so common.

When will they ever learn?

The UK government has announced plans to monitor social networking sites. This demonstrates all the faults of government. It is obviously intrusive on personal liberty and freedom. Another is a need to create new and more inventive ways to extend control and monitoring for “security reasons”. In addition, control and regulation seem to be the government’s solutions to any type of chaotic or unplanned system. All this not only undermines political freedom but also makes a fundamental economic error. Society cannot be improved and perfected by the collection of ever more information and the government’s strategies of centralised control are therefore likely to be ineffective at achieving their objectives.