We have heard that one of the sources
of the current economic mess in the
world was a lack of regulation of banking
and insurance industries. Trillions
of dollars of bad debt have come to
light. The government has allocated
hundreds of billions of dollars to
help prevent the banking and insurance
On the other hand, the Congress
of the U.S. has just passed a new
set of regulations for the credit
card industry. The government has
assured the banks and Wall Street
that they will be regulated to prevent
such huge errors of "judgement" in
the future. The government will regulate
the economy to keep us safe.
The government has also regulated
other things in the past. The use
of drugs, for example, is the subject
of much legislation, both as regards
prescription drugs and recreational
drugs. We even have been waging a "war
on drugs" for 30 or so years.
The government has attempted to
regulate the importing of goods and
people's sex lives and economic activities
on Sundays (blue laws).
But these attempts at regulation
are almost universally total and
complete failures. Why is that?
I suggest that in almost every case
of government regulation a large
amount of money is involved. The
near failure of the banking and insurance
industries involved trillions of
dollars. The credit card industry
also involves hundreds of billions
of dollars. Organized crime has a
yearly gross income in the hundreds
of billions of dollars.
I suggest that it is impossible
to regulate or control human behavior
when dealing with such large amounts
of money. I suggest that the people
who go after such large amounts of
money, (and almost everyone wants
as much of that money as they can
get) are among the richest and most
powerful people in the world. They
can use their money to influence
the laws that are passed and how
those laws are enforced (or ignored).
Every city has organized crime corrupting
the police and the court system.
How do we know? Because organized
crime is a mass marketing system,
like Wal-Mart but illegal. You can't
sell that much merchandise and services
to the general public without many
people knowing who the salesmen are
and where they are. With such widely
distributed knowledge of who is participating
in organized crime, the only way
they can conduct their business is
to corrupt the police and courts.
This they can do using money.
The powerful people who are trying
to get the vast amounts of money
involved in banking and insurance
are just as willing to do illegal
and unethical things and if they
are not, they will soon be replaced
by those who are willing. There is
a tremendous amount of motivation
to do whatever it takes to get some
of those billions and there are many
people who will yield to that temptation
no matter what they have to do.
In short, even if it wanted to do
so the government could not regulate
human behavior effectively to prevent
fraud, graft, corruption, cheating,
theft, and anything else you can
think of that might possibly gain
money for those committing these
immoral actions. Large amounts of
money destroy the law as surely as
a tornado destroys mobile homes.
It doesn't matter whom we elect
or what laws are passed or who is
trying to enforce the law. (Remember
the "Untouchables"? Remember
how they eliminated organized crime
in Chicago? That's right, they didn't
eliminate it.) A large amount of
money will overwhelm such efforts
to regulate and bring destruction
and catastrophe in its wake. This
has been true in every nation for
all of recorded history.
What lesson do you learn from this?
A. The Libertarians are right, regulation
is hopeless so don't even try.
B. We just have to be better people
and love our neighbors.
C. The socialists are right. If
the government owns everything then
there will be no need for regulation.
D. People are pretty stupid.
E. If you are smart enough and rich
enough you can get away with anything.
F. That I wasted my time reading
a depressing post about something
I can't do anything about.
G. See, we should have elected a
Republican Administration in 2008.
H. See, we should have elected a
Democratic Administration in 2000.
I. The Yankees will win the World
Series this year.
J. Other: please specify.
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Next: POM: An Introduction
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