Tuesday, June 12, 2012

Bad regulation

"Bad regulation is much worse than no regulation because you create conditional expectations of safety." From All the Devils Are Here: The Hidden History of the Financial Crisis (245) Mclean and Nocera go on: "It [bad regulation] helped feed the fiction that these risks [subprime] could be quantified or even understood."(245) So, in thinking about expansive regulatory regimes such as those proposed by Dodd Frank, the EU in Europe, or Health Care in this country I have to wonder about the risk of "bad" v "good or effetive" regulation. This is a significant challenge. The role of institutions is at the heart of welfare enhancing societies and it seems as if policy makers today are failing to consider the consequences of past "bad" regulation in their haste to construct new and expansive regulatory regimes. McLean and Nocera's books is outstanding and I recommend it highly.

No comments:

Post a Comment