As we stumble from crisis to crisis, from D. C, to Dubai to Davos, a common theme is emerging about what to do about all these problems. The answer is always seen as more regulation, both intensive (require financial derivatives to be traded on public exchanges and settled through a central clearing house), and extensive (the recent appeal by the head of the IMF for individual countries to NOT issue and enforce their own financial regulations, but rather to cooperate with one another to create a single world-wide regulatory scheme.)
Seeking global solutions to these problems is a genuinely rotten idea. In the case of financial regulation, it is promoted by politicians and bureaucrats who are either under the delusion that creating a “more orderly” financial system would be in the best interests of people everywhere, or to aggrandize themselves, or both.
There is a certain prima fascia attractiveness of having a single world-wide financial regulatory regime, just as there is prima fascia attractiveness to the idea of a single world government such as that envisioned by some of the proponents of the United Nations or the League of Nations. It would make life easier for tourists, treasurers of multinational corporations and stock market analysts.
But rather than encouraging improvements in the human condition, a world-wide financial regulatory regime would freeze our financial practices and institutions as they are now or as the authors of the regime think is appropriate, with little possibility of further evolution. Its long range success would depend on the ability of the planners to predict the nature of financial needs decades into the future, a skill they demonstrably lack.
This regime, if ever established, would never change because its managers and administrators – like all bureaucrats – would prize stability above all else. There would be no way to expand and modify goals and expectations; to test new ideas against the old; to seek new products and processes; to improve effectiveness and promote efficiency.
But we in the United States have long had the means to create just these sorts of improvements in our lives. It is called competition, and it works just fine. The venture capitalists in Silicon Valley worked out ways of motivating entrepreneurs, testing ideas in the marketplace, monetizing the successes and terminating the failures. And they did it without any help from the Worldwide Financial Authority.
So, why not let financial institutions choose their regulators, so long as each regulator is controlled appropriately? Why not let multinational corporations establish their headquarters in countries with the most pro-business laws and institutions? That is what our multi-state corporations have been doing in the United States for 200 years, and it has worked pretty well for us.
Gerry Hoffman
Come On
Gracias
SuperSonic
Just looking at your post on my brand new Google Phone , and I wanted to see if it would allow me reply or if it made me go to a full pc to do that. Ill check back later to see if it worked.
Strange this post is totaly unrelated to what I was searching google for, but it was listed on the first page. I guess your doing something right if Google likes you enough to put you on the first page of a non related search.