An article on the 'regulation' fiasco

http://www.ibdeditorials.com/IBDArticles.aspx?id=327193177201817

I like this article for one major reason, and that's this line:

Regulation is of course not always bad, and it would be hard to find anyone of any party who says that it is.

Regulation, as in the act of using the threat of government force to stop people from doing something in the economic sphere, isn't an inherently good or bad thing. Like guns, screwdrivers, and axes, regulation is a tool whose usefulness is determined more by the way it's employed than anything intrinsic to the act. Only the most hard-core anarcho-capitalist, for instance, is against any kind of environmental regulation, but you'll find a surprising number of rightist Republicans and other free market types aren't against using regulation to stop the dumping of harmful chemicals into our nation's rivers or the clear-cutting of our valuable forests.

The problem with regulation is when it is used by people who believe it is inherently good, and that wide-spread and totally encompassing regulation is somehow good for the economy. The lesson we should have learned in the 1970's, and the reason Reagan was able to get elected and do everything he did, was that the hand of government can very well lie too heavily on the private sector. After the 'de-regulation' of the 1980's we experienced one of the longest periods of economic creativity ever. While certain regulations thrown to the way-side in that period contributed to the current crisis, asking regulators to be pre-scient to the degree necessary to predict an economic bubble decades in the future is asking a bit too much. The current crisis isn't a condemnation of all de-regulation, nor is it a sign that government should have nothing to do with regulating the economy (as the story in the article above would suggest), it's a sign that the world is a lot more complicated than we give it credit for.

Like all things in life, we need to be able to find that razor-thin balance where regulation is used to ensure safe working conditions and an environmentally sound economy while still allowing business leaders the flexibility they need to succeed in the increasingly competative global economy. No matter how much Nostalgiaconomists like Paul Krugman would like to return to the halycon days of the 1950's with a highest marginal tax rate of 90% and more government regulation and bureaucracy than you can shake a stick at, that window has closed. Not only has Europe long ago gotten back on its feet after the second World War, but Asia has finally found grounding and remade itself into both a trading partner and rival for the West. We can't afford to return to the 'safe' cocoon of pseudo-syndicalism we enjoyed in the post-war years. The way forward isn't to look backwards.