There are many arguments one can make against regulations. Regulations tend to reduce innovation, reduce efficiency, distort the market, respond slowly to change and can make the problems worse.
But what is perhaps most limiting of all, is the complete failure of regulations to do what they are supposed to. Take the example of the SEC’s 2005 investigation into whether or not the allegation that Bernard Madoff “is operating a Ponzi scheme has any factual basis”. What did the SEC conclude? Felix Salmon quotes:
The 2005 review and Mr. Markopolos’s report prompted the SEC to open an enforcement case, a notch more serious in the SEC’s world than the previous examination. “The staff is trying to ascertain whether” the allegation that Mr. Madoff “is operating a Ponzi scheme has any factual basis,” according to the SEC case memo…
“The staff found no evidence of fraud,” according to the SEC case memo.(emphasis mine)
Yes, that is right, even when the government is explicitly investigating a specific crime, you can’t expect them to get it correct.
Felix Salmon has more. A different example of the same thing is here.
This assumes that the regulatory agency are actually TRYING to catch someone commit a wrong doing…Regulations will never work especially when those politically appointed to oversee and enforce regulations are committed to not regulating in the first place…
The last 8 years are a wonderful example of this…countless examples of government being inefficient, especially when being run by conservatives..
CA energy crisis is another example of that-Deregulate the energy industry and then leave it ripe for manipulation
Fair point but I think that the business scandals that were performed - yet only uncovered in the next administration - during the Clinton years shows that regulations is also, intrinsically limited.