Three Laws Safe (meus_ovatio) wrote in talk_politics,
Three Laws Safe

Some simple concepts for law-making.

As everyone knows, and as everyone learned from Prohibition, a law only matters inasmuch as it is enforced. What this means with regards to the dizzying world of finance, is that any number of rules and regulations on books are meaningless. Another very simple concept for people to grasp is that too few cops equals very little enforcement. However, when it comes to Wall St., this basic intuition is lost in a flood information and bewildering language that regular people don't have the time to figure out. This is generally ok, since we have a government whose job it is is to understand and police these things, right?

Very roughly, and very briefly, one of the over-arching problems with our system is that the Federal Reserve has mammoth regulatory authority, and uses very little of it. It's like having a police department but no police. Just a building with a sign, like the fake security system signs people put up to fool people into thinking they have a security system.

The other basic concept is regulatory capture. Regulatory capture is simply a harmless sounding euphemism for corruption. Corruption is bad, whereas regulatory capture is an arcane thing having something to do with some system I don't understand anyway. What this concept entails is that these fake security system signs are actually fake and bought by the burglars. They're nice little signs letting people know which houses to hit: the ones without security systems with a fake sign neatly announcing their vulnerability to other predators.

So when we discuss regulation or responses to problems, the legislative agenda is entirely moot because there aren't any cops . And what cops there are, are patsies. Here's how the language works: Afghanistan suffers from corruption and decrepit governance. America suffers from regulatory capture and under-funded agencies.

What we have isn't a problem, per se, just some wrinkles that need a little touching up. We aren't like Afghanistan. Afghanistan is bad. We're just very complicated. The language we use about ourselves and about others highlights the lack of clarity and understanding, while explaining why people aren't all that concerned about it. We have procedural issues but other countries are just plain bad.
Tags: finance, regulations
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