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We're in a period where the public polity is pretty amenable to regulating industries. A lot of this is down to "I don't trust the fuckers" which is.. fair, I w

We're in a period where the public polity is pretty amenable to regulating industries. A lot of this is down to "I don't trust the fuckers" which is.. fair, I would say. But..., I don't think people really understand what this means. One thing it means is larger corporations. The first thing that happens when a market regulates is usually "consolidation." Capital markets reward larger companies, when regulation starts. The larger, older companies tend to be preferred by regulators. The large companies are then "safe" as the regulation slows disruptive forces. A second thing that happens is bureaucracy. The bank replies to this guys with a generic "not our fault, regulators made us do it." This can be random, as "compliance" people gain power internally and start making decisions on a purely bureaucratic basis, without thinking about outcomes. Sometimes it's strategic. Smart lawyers interpret some parts in a dumb-literal way, because it allows them to do something they want to do while blaming the regulator. The same lawyers can creatively interpret some other clauses, allowing them to bypass/ignore some major part of the regulation, sometimes the whole point of the regulation. It's almost impossible to know which is happening. David Graeber (provocateur and anarchist anthropologist) had a good bit on this. Basically the bank explains their own inexplicable bureaucracy by saying it's the regulator's bureaucracy, avoiding responsibility. I'm not suggesting that banks should be a unregulated, just that quality matters. Quality is inadequate, currently. So much so that it's hard to predict what effects the introduction of a regulatory authority will have. Its a crapshoot.

emodendroket 8y ago
A big part of the old regulatory regime was much more robust antitrust enforcement, which is one answer to your concern about consolidation.
munificent 8y ago
> But..., I don't think people really understand what this means. One thing it means is larger corporations. The first thing that happens when a market regulates is usually "consolidation." Consolidation is the natural trend of all businesses, regardless of regulation. Adam Smith in the 1700s said "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." Business owners have a lot in common with owners of similar businesses, so it's pretty natural for them to know each other, get along, and have aligned goals. From there, it's a pretty short step to cooperation. Why make your business a zero-sum game by competing when you can make it non-zero-sum by cooperating? So cartels and monolithic businesses form all the time and have all the way batch to the Dutch East India Company (though that also had government support too). Remember, anti-trust regulation is a kind of regulation too. > I'm not suggesting that banks should be a unregulated, just that quality matters. Quality is inadequate, currently. I agree, completely. One of the things I've always found dumb is arguments around big government versus small government. What really matters is smart versus stupid. People seem to assume that it's simply impossible to change how well a government works. So small government people "solve" poor government by minimizing it while "big government people" generally think government works pretty well, at least relative to profit-driven enterprises.
- dalbasal 8y ago
  The dutch & east india companies had "royal charters" which is essentially a monopoly license, the equivalent of a modern patent. This was the modern way of regulating industries that were thought to need regulation. At the time (and for most of human history), foreign trade was thought of as one these. I'm not sure the relevance, not driving at anything in particular. Cartels and monopolies have all sorts of origin stories. The biggest monopolies historically (and currently^) were formed via royal charter. ^Saudi Aramco is arguably the world's biggest company and holds a royal monopsony charter.
BurningFrog 8y ago
I understand why people don't trust bankers. I don't understand why they trust regulators. They same asshole who would ruin your life at a bank can get a job as a regulator and ruin your life from there. And while you can switch bank, you can't switch regulator.
- freehunter 8y ago
  >And while you can switch bank, you can't switch regulator You get the chance to vote for your government every year or two.
  - c4h8o3del 8y ago
    The vast majority of staffers don't change when the leading party does in a number of countries.
  - cromulent 8y ago
    True, but every day the bank's lobbyists influence your government.
  - BurningFrog 8y ago
    I keep hearing that I I can't understand how anyone can make that argument in good faith. If I decide today to switch banks, I'll have everything handled in a week at the most. I'll probably have to visit a few bank offices in person, show ID etc, but it's at most a few hours of work. To personally enact a different set of bank regulations through the ballot box, I have to do... things that are so superhuman and unrealistic that I don't know that anyone has ever done it.
- dv_dt 8y ago
  But if you forgo the regulators, then you're choosing to be overcome by bankers - and soon, you can't switch banker (or you can but it becomes a moot action).

emodendroket 8y ago

A big part of the old regulatory regime was much more robust antitrust enforcement, which is one answer to your concern about consolidation.

munificent 8y ago

> But..., I don't think people really understand what this means. One thing it means is larger corporations. The first thing that happens when a market regulates is usually "consolidation." Consolidation is the natural trend of all businesses, regardless of regulation. Adam Smith in the 1700s said "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." Business owners have a lot in common with owners of similar businesses, so it's pretty natural for them to know each other, get along, and have aligned goals. From there, it's a pretty short step to cooperation. Why make your business a zero-sum game by competing when you can make it non-zero-sum by cooperating? So cartels and monolithic businesses form all the time and have all the way batch to the Dutch East India Company (though that also had government support too). Remember, anti-trust regulation is a kind of regulation too. > I'm not suggesting that banks should be a unregulated, just that quality matters. Quality is inadequate, currently. I agree, completely. One of the things I've always found dumb is arguments around big government versus small government. What really matters is smart versus stupid. People seem to assume that it's simply impossible to change how well a government works. So small government people "solve" poor government by minimizing it while "big government people" generally think government works pretty well, at least relative to profit-driven enterprises.

dalbasal 8y ago
The dutch & east india companies had "royal charters" which is essentially a monopoly license, the equivalent of a modern patent. This was the modern way of regulating industries that were thought to need regulation. At the time (and for most of human history), foreign trade was thought of as one these. I'm not sure the relevance, not driving at anything in particular. Cartels and monopolies have all sorts of origin stories. The biggest monopolies historically (and currently^) were formed via royal charter. ^Saudi Aramco is arguably the world's biggest company and holds a royal monopsony charter.

BurningFrog 8y ago

I understand why people don't trust bankers. I don't understand why they trust regulators. They same asshole who would ruin your life at a bank can get a job as a regulator and ruin your life from there. And while you can switch bank, you can't switch regulator.

freehunter 8y ago
>And while you can switch bank, you can't switch regulator You get the chance to vote for your government every year or two.
- c4h8o3del 8y ago
  The vast majority of staffers don't change when the leading party does in a number of countries.
- cromulent 8y ago
  True, but every day the bank's lobbyists influence your government.
- BurningFrog 8y ago
  I keep hearing that I I can't understand how anyone can make that argument in good faith. If I decide today to switch banks, I'll have everything handled in a week at the most. I'll probably have to visit a few bank offices in person, show ID etc, but it's at most a few hours of work. To personally enact a different set of bank regulations through the ballot box, I have to do... things that are so superhuman and unrealistic that I don't know that anyone has ever done it.
dv_dt 8y ago
But if you forgo the regulators, then you're choosing to be overcome by bankers - and soon, you can't switch banker (or you can but it becomes a moot action).