300 word commentaries on complicated topics are bound to be superficial. The challenge is to say something interesting without being too superficial, while realizing that no matter how well you do, you will get scornful emails accusing you of willfully ignoring the six most important things. Anyway, this morning on Marketplace, I discuss regulation and the financial crisis. Here’s the core:
One lesson of the crisis is that ours is hardly a “free” market system. The American economy is a byzantine amalgam of market and state institutions enmeshed in a thicket of regulation. When part of it goes bust, it’s too easy to pin the whole blame on market failure. A market is only as stable as the regulations that define it.
We don’t need more regulation or less. We need better regulation. But who will give it to us? Technocrats, like Ben Bernanke and Henry Paulson? Congress? Our fearless lawmakers on Capitol Hill did very little to alter Paulson’s initial two and a half-page plan — other than to add 450 pages of pork.
Yeah, I recycle lines from the blog.