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Thanls for the link. I just followed it, and
I believe I get the gist of what he is saying.
I've heard of the Austrian economist before
and heard some of the arguments. Of course, there are many examples from history
that support those points. Right, on the banks, we can have
(1) no regulation, (2) bad regulation,
or (3) good regulation.
I have to conclude that
(1) no regulation is not a good solution because, with the
history of banking crises, e.g., the
crises that led to the 1913 regulations,
when there was no regulation, since
banking has such a crucial role in the economy and
also has motivations for profit, we can
too easily get serious systemic problems. E.g., banks need to be told to have
sufficient reserves. For (2) bad regulation: Sure we don't want that. For (3) good regulation, maybe we can't really get
that. And maybe attempts at (3) historically have
caused lots of problems, e.g.,
dumb, nasty governments printing money
by the trillions of trillions. Still,
we don't want (1) or (2). So, we do the best we
can trying to get (3). Here in the US, at least since 1933,
I believe that the regulation worked fairly well
(as intended, not so well more broadly,
e.g., didn't get us out of the Great Depression;
we didn't get people back to work until
people started shooting at us and we
started war production, in which case supposedly
within 90 days everyone had at least one
job offer and many people had 1+ jobs)
until the crash of 2008. Well? No, only fairly
well. My guess is that that regulation did work
better than we would have had with
(1) no regulation. My first cut take on your concerns is that you
are more concerned about the Fed
and it's role in the money supply than
just banking regulation. So, right, for a recent mess up,
Greenspan actually feared, in simple terms, that all the computers
would stop on January 1, 2000 and, from this fear,
opened up the money supply to keep the economy
going nevertheless and, net, printed too much
money. So, we get a suspicion: To drive the best in a
straight line or fly an airplane at a constant
altitude in a straight line, just tie the controls
down with strong rope and keep human hands far away.
Well, if only due to lots of random exogenous
influences, that simplistic constant control
doesn't work very well for cars, airplanes, or
a money supply or an economy. Instead, we need a pilot, right,
a good pilot, and maybe Greenspan was not so
good near year 2000. Or, maybe instead of a Fed, just go on a gold
standard. Maybe. But, I was talking about banking regulation
and not so much what nasty governments can
do to mess up the money supply with printed
money. We regulate lots of things, medicines
(safety and efficacy),
food safety, auto safety, building safety
(e.g., building codes, e.g., to protect
against another shirtwaist factory or whatever
it was fire), caps on aspirin bottles,
age for drinking beer, and much more. Do I like some mandate of anti-lock brakes on
cars? Nope: I don't want the extra cost
at purchase or maintenance. Regulation on car tailpipe emissions? Out in the
country, say, 90% of the US land area,
I see little need for the regulations, but I
concede that in the cities the regulations
are from helpful and justified up to just crucial.
Yes, those regulations recently cost me
$300 for a catalytic converter, with, maybe,
platinum, when out in the country where I live
a simple piece of pipe, for maybe $2, would have been fine.
But, no joke, the regulations did a lot to
clean up the air in the cities, with no doubt
good health effects. Even
I'm not enough of a libertarian to conclude that
we should have no regulations. |