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> "Regulators can't regulate assault away." I have no beef with enforcing laws to prevent a priori harmful actions. By this I mean: actions in which we don't

> "Regulators can't regulate assault away." I have no beef with enforcing laws to prevent a priori harmful actions. By this I mean: actions in which we don't need to wait 10 years to decide who the victim is. A more apt analogy would be the War On Drugs. Good luck attempting to regulate the demand away, when you have mutually agreeable transactions in which both sides believe they are benefiting.

steveklabnik 16y ago
I'm also very against the War on Drugs, but for different reasons: while it's true that you can't regulate away the demand, it's not only unreasonable to regulate what things I put in my body, but also, by making them illegal, you cause all kinds of other associated crime and violence. The world would be a better place overall if drugs were legal. The situation around an unregulated financial industry is much less clear. Without any regulation, I don't imagine that the world would be a better place. At least, it's not as clear to me as a world with legal drugs.
- RickHull 16y ago
  > it's not only unreasonable to regulate what things I put in my body, but also, by making them illegal, you cause all kinds of other associated crime and violence. The world would be a better place overall if drugs were legal. I believe the same things apply to mutually agreeable transactions. One of the main reasons subprime blew up is that the ratings agencies gave AAA ratings to the toxic CDS instruments. AIG and several other large institutional investors such as pension funds have regulatory requirements to only buy AAA-rated debt in various scenarios. This promotes an environment of ignoring due diligence and relying on the ratings agencies operating on 3rd-rate employees and perverse incentives. My broader point is that the public is clamoring for Big Daddy to regulate away the risk. We all want to make 15% per year, risk free. The reality is that risks are correlated with rewards, and there are a wide range of investment products to match individual needs. What is the right amount of regulation? Beyond addressing information asymmetry or recognized market failures, I can't imagine much. Have the failures of the past 20 years been from too much regulation or not enough? How do you tell? How much is too much?

steveklabnik 16y ago

I'm also very against the War on Drugs, but for different reasons: while it's true that you can't regulate away the demand, it's not only unreasonable to regulate what things I put in my body, but also, by making them illegal, you cause all kinds of other associated crime and violence. The world would be a better place overall if drugs were legal. The situation around an unregulated financial industry is much less clear. Without any regulation, I don't imagine that the world would be a better place. At least, it's not as clear to me as a world with legal drugs.

RickHull 16y ago
> it's not only unreasonable to regulate what things I put in my body, but also, by making them illegal, you cause all kinds of other associated crime and violence. The world would be a better place overall if drugs were legal. I believe the same things apply to mutually agreeable transactions. One of the main reasons subprime blew up is that the ratings agencies gave AAA ratings to the toxic CDS instruments. AIG and several other large institutional investors such as pension funds have regulatory requirements to only buy AAA-rated debt in various scenarios. This promotes an environment of ignoring due diligence and relying on the ratings agencies operating on 3rd-rate employees and perverse incentives. My broader point is that the public is clamoring for Big Daddy to regulate away the risk. We all want to make 15% per year, risk free. The reality is that risks are correlated with rewards, and there are a wide range of investment products to match individual needs. What is the right amount of regulation? Beyond addressing information asymmetry or recognized market failures, I can't imagine much. Have the failures of the past 20 years been from too much regulation or not enough? How do you tell? How much is too much?