A case for regulation

By Ron Beasley

Yes there are still a few real conservatives who are sane.  For an example I'm going to take you on a field trip to The American Conservative magazine where Eamonn Fingleton makes a case for government regulation of Wall Street.  Now I suggest in the strongest terms that you go read the entire commentary but I'll give you a few teasers.

The amazing aptitude of Wall Street insiders to feather their own nests at the taxpayers’ expense should be a crucial concern as legislators try to craft a stable and productive future for the American financial system. A key question is how Wall Street’s greed can be reined in. In truth, there is no substitute for regulation.

This isn’t a view that will find immediate favor with conservative readers. But it is being espoused by no less a plutocrat than Michael Bloomberg, the former Wall Street insider who has recently morphed into a budget-cutting mayor of New York. More significantly, it has been vociferously championed by Paul Craig Roberts, the chief architect of President Ronald Reagan’s economic program.

Now those of you who used to read Middle Earth Journal know that Paul Craig Roberts was one of the first to warn us about the Bush administration and was usually even more shrill than the lefty blogs. But more from Fingleton:

More generally, the evidence of American history strongly suggests that judicious financial regulation can be a powerful force for good. It is surely not an accident that beginning in the latter half of the 1930s, the United States enjoyed a respite of nearly 50 years in which there was not a single serious banking crisis and no serious stock-market setbacks except those triggered by the oil shocks of the 1970s. This period coincided exactly with America’s era of tightest financial regulation. It is notable, moreover, that for most of the period the United States enjoyed a unique combination of fast growth at home and unquestioned economic leadership abroad. With the exception of a few radically libertarian economists, no one questioned the basic case for regulation. During the Eisenhower years it was taken for granted by Republicans and Democrats alike that though regulatory restraints could be a nuisance at times, the positives overall greatly outweighed the negatives. The same went for the Reagan administration, which, as Paul Craig Roberts recently pointed out, “most certainly did not deregulate the financial system.” Roberts went on to name the Clinton and George W. Bush administrations as the instigators of the radical deregulation being widely blamed for the current crisis. (An earlier piece of deregulation was passed during Jimmy Carter’s term.)

If I didn't know better I would think that Thom Hartmann was now writing for The American Conservative as the bold section above is a point Hartmann has been making on his radio show for some time. 

So why is regulation necessary?  Fingleton nails it:

A key problem is the notoriously asymmetrical nature of financial knowledge. Put another way, your broker knows more than you do. If he wants to do well for you, that is fine. But few securities salespersons become rich that way, and they have often preferred to prey on their customers’ ignorance. Usually this is done subtly, at least where Wall Street’s more reputable firms are concerned, and in recent years the tool of choice has been the invention of ever more esoteric “new products” that just happen to be ever more difficult to price accurately.

Yes, the so called conservatives who oppose all regulation are not conservatives at all but just pro greed.  That's what the conservative movement has become  under George W. Bush and there are still a few conservative who don't like it much.

Comments

[Nelson M.]

Ben Stein is another one.

The Milton Friedmanites have spent the last 40 years trying to push for anarcho-capitalism. It's been their little pet project, and it's been subsumed into conservatism. Now there's a funny thing going on. Conservatives are splitting into camps in this failing campaign, but if you notice, the vast majority are attributing the failure to McCain, which is partially true, but not completely the case. They don't want to give up on total deregulation, because that would mean admitting they were wrong. Blaming Jimmy Carter for the CRA and blaming McCain for his campaign's failure allows them to not have to honestly look at their own ideology, their own failing.

My fear is that their stubbornness will prevail in the future, for example, in four years, if Obama can't turn the economy around (assuming he wins).