walkitout (walkitout) wrote,
walkitout
walkitout

rambling about regulation

Looks like the, hey, we're in this mess because the regulators weren't regulating meme is starting to gain a little traction.

http://norris.blogs.nytimes.com/2008/07/23/will-wall-street-sober-up/

From the comments (which are pretty erratic -- not as good as the New Old Age, but better than Freakonomics, which says stunningly little):

http://polecolaw.blogspot.com/2008/07/i-have-been-following-and-writing-about.html

I've been thinking a bit more about the nasty little hole we are in, and come to a few conclusions. We _did_ have a bunch of regulations, and the regulations had a variety of costs associated with them. As our recollection of the problems the regulations were successfully preventing receded, we started to believe in things like "the end of the business cycle". The costs of those regulations didn't make sense any more, because we couldn't perceive the benefit (pro-vaccine folk argue similarly, I might note, without here taking a stance either in general or in specific about vaccines).

As _individuals_, the best way to deal with macroeconomic changes is to attempt to predict them (pretty impossible, basically) and/or insulate ourselves from the worst of those effects. Generally speaking, the goal here is to be able to outrun the other people who are being chased by the bear. Needless to say, collectively -- as policy, that's kinda gross/creepy/inappropriate/just plain wrong.

When you try to analogize from personal "responsibility" to policy, you run into problems.

As long as we were still regulating, but just doing less of it, things got more cyclical and unstable in a relatively smooth way. But in the last several years, our leaders have explicitly taken the stance that Regulation is Wrong and put people in charge of enforcing the regulations who have as a personal political goal undermining those regulations. You could get into why -- personal benefit, ideology, whatever -- but that's what has been happening.

The smart folk, of course, are just trying to Outrun the Bear and the mean smart folk are busy blaming everyone else for not running as quick, and some really evil folk (smart or otherwise) are busy trying to get others to stop running. Spend that rebate check. Buy a house. No, don't swap that SUV for a Mini Cooper. Etc.

So as an individual, trying to predict the future so I can outrun the bear or be a long ways away from the bear or whatever seems appropriate, things look really bad and really impossible to recover from. But if I look at this problem from a policy perspective and STOP trying to predict the future but instead try to change the present, the problem is unbelievably straightforward.

Make the banks write down the bad loans. If you have to bail out the depositors, fine, but make sure the executives and the shareholders get absolutely nothing until after the problem they created is fixed. It's worse for everyone if all those houses wind up unoccupied; try to find a way to stop the freefall before it goes that far. And don't raise the limit on FDIC insurance until _after_ this whole thing is fixed.

Prosecute regulators who failed to do their jobs. Make deals with people who can document that they were ordered to do (not do) thus-and-such; go after the big fish preferentially. Don't just let a new election wash all this crap away. Because there is no sink big enough to absorb this crap.

Fuel costs high? Create national programs to reduce our usage now and going forward. Climate change in progress? Ditto to switch over to low or no carbon options. Direct technological development to enable us to need less "base load", since that seems to be the big stopping point on wind/solar and to improve battery technology, since that helps with base load and may help solve our transportation issues.

Instead of trying to bail out industries or corporations which have been large parts of the US economic system but are increasingly inappropriate, find a way to clear a way for them to finish toppling. They're going down; get everyone out of the way.

(Get out of unnecessary wars. Apologize for being a jackass. Work with the international community of nations in a humble and deferential way.)

And while we're doing all that, see if we can't find some way to deal with demographic shrinkage. It isn't just about financing retirement -- it isn't even just about paying the bills on nursing care at end of life. We need to figure out a way to supply more humane care at end of life. It's not at all clear what that means from a policy perspective (I know what the individual solution is: big pile o' dough and shorten the end-of-life process as much as possible -- but those solutions aren't necessarily good policy), but I suspect it means recognizing that we need a lot of bodies to take care of all the bodies, and everyone needs to have their needs met. As long as anyone sees a profit opportunity here -- whether it's for CT scans or new and better drugs or mammograms for 85 year olds -- we won't be doing the cheapest/best job we can in this area. It's fine if it looks like a place to have a nice, stable, won't-get-rich-but-won't-starve-either career -- sort of like being an elementary school teacher. And maybe that should be the goal. Otherwise, I foresee a fork in the road where we're either all spending some years of our life "volunteering" in this field or accepting assisted suicide if not euthanasia on a grand scale. Or more of the same: a few people get very expensive care, a lot more people get care that makes everyone unhappy and is still pretty expensive, and every year, more and more younger people go without any care at all.
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