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I have heard Gregg Berman speak, though I hadn't read this speech until skimming it just now. I do think that there is, generally speaking, a heartfelt desire to develop the tools and data needed to gain insights that Berman is talking about. I think there are two challenges to unpack. One, though I wasn't insinuating it, I could have been. I do believe that regulators are more lawyers than physicists. Berman is the exception rather than the rule. Two, Berman, in particular, makes a fundamental error that I think is very easy to make. There's a difference between "complex" in the sense that something has a lot of parts, and interactively complex in the sense that parts of a system are fundamentally unknowable and it can experience wild and unexpected dynamics. I think Berman doesn't distinguish between those two types of systems (repeated analogies to cell phones give some indication of his thinking), and more generally, regulators don't understand the aggregate cost of complexity. In my view, things like Midas are orthogonal to some deeper issues facing the markets. Regulators have created a quasi-competitive market that breeds this sort of interactive complexity. Then, when something goes wrong, they rely on punishment and enforcement actions [1] to target individual firms that have made "mistakes." This not only does not address root causes, it creates a culture of silence around technology risk issues within firms and across the industry. I've written more about this here: http://harvardkennedyschoolreview.com/preventing-crashes-les... [1] See, e.g., http://www.sec.gov/litigation/admin/2013/34-70694.pdf and http://www.sec.gov/litigation/admin/2013/34-69655.pdf |