The Dodd-Frank financial reform bill is one year old. How’s it been doing?
- One year after financial reform, and… (Andrew Sullivan)
…we can’t really tell. Rob Johnson suspects that Dodd-Frank is a poster child for regulatory capture:
For Wall Street, it has gone swimmingly. They have the process tied in knots and at the same time can complain about the muddle to further weaken government. For the rest of us, a weak bill is getting diminished further. It is the fate of money/lobby-driven political machinations to make everyone disenchanted with government.
(Emphasis added — and oh, if only!)
Sullivan gloomily accepts this evaluation, and adds:
I’m not an expert in this, but I fear Johnson is correct. At some point, we need to come back for more.
(Emphasis again added.)
This reasoning doesn’t surprise me — I’d be pretty foolish to keep getting surprised thereby. What does surprise me is that intelligent, sophisticated people can write about the regulatory capture of legislation by the powerful interests it’s intended to control… and then turn around and demand more such legislation! Surely, having just articulated the thought that powerful regulation of a powerful interest is inevitably coöpted by the interest it’s meant to regulate, there must be some voice at the back of one’s head that says “psst— maybe we need a different, less vulnerable, process here?”
In the end, of course, Sullivan is a journalist despite all his pragmatic conservatism, and journalists think in terms of stories and narratives. Were he of a more analytic and empirical bent — a scientist, say — he’d surely notice the contradiction long before he hit “post”.
Oh… oh dear.
On the pervasive graft and corruption being uncovered in the News of the World/phone-hacking investigation, Dr. McCabe writes:
The collusion between politicians, journalists and police, however, is actually quite an interesting socio-political case study. Free market thinkers, such as Matt Ridley, have long trumpeted the power of bottom-up, spontaneous self-organisation in society, over top-down regulation, and what we have here is, in fact, a perfect demonstration of just such a phenomenon.
There’s been no conspiracy here, no centralised command, planning and coordinating the collusion between the various agencies. Instead, the politicians, journalists and police have spontaneously evolved a means of cooperating for mutual benefit. Each individual involved has sought merely to preserve and promote their own careers, making short-term, self-interested decisions based upon incomplete information. The collective result of all these minor, self-interested decisions, has been a high degree of collusion between those who make the law, those who enforce it, and those who report it.
Too true! The top-down regulatory state has been dominated by a self-organizing network of self-interested collusion against which it was signally unable to defend itself. In fact, its opacity and overarching power over the citizenry it purports to represent and serve allowed this network to grow ever more powerful and ever more malignant than it could have in the sunlight.
McCabe, however, concludes that:
Unfortunately, when it’s necessary for institutions to remain impartial and independent, the existence of such cooperation is equivalent to collusion and minor corruption. Which is one reason why an effective democracy requires top-down regulation to constrain the spontaneous formation of cooperative organisation.
(Emphasis once again added.)
OH GORDON MCCABE NO!