And Who Would Regulate the Regulators?

John Stossel has this piece explaining why more regulation is not the answer to the Bernard Madoff case (this argument applies, of course, pretty much to government regulation of any voluntary behavior).

The $50-billion investment scam allegedly pulled off by Wall Street insider Bernard Madoff has ignited predictable calls for more regulation.

The "massive fraud ... was made possible in part because the regulators who were assigned to oversee Wall Street dropped the ball," said President-elect Obama.

Notice the disconnect. Regulation failed, so we need more regulation. I see it differently. Regulation failed, so let's try free markets. That would be a change.

Of course, when a regulatory agency fails, the usual response is to make it bigger, not abolish it. Economist Robert Murphy notes, "In the private sector, when a firm fails, it ceases operations. The opposite happens in government. There is literally nothing a government agency could do that would make the talking heads on the Sunday shows ask, 'Should we just abolish this agency? Is it doing more harm than good?'

Yet another instance demonstrating how government growth is inevitable. When something fails, it is made bigger. By that criteria, we can reasonably conclude that there's been a lot of government failure in the last few generations.