Boaz on the Nobelists and Regulation

by Don Boudreaux on October 14, 2009

in Economics, Myths and Fallacies, Regulation

The Cato Institute’s David Boaz challenges the New York Times‘s mistaken take on this year’s Nobel Prize winners in economics — and, in the process, Boaz does a nice job of putting to rest a juvenile understanding of “regulation.”

Comments

{ 2 comments }

Anonymous October 14, 2009 at 7:19 pm: That was a weird article.

Boaz is trumping up the New York Times article and then disputing it. The Times didn’t “spin” anything – I thought their article was fine.

Re: “Neither Ms. Ostrom nor Mr. Williamson has argued against regulation.”

True.

RE: “Quite the contrary, their work found that people in business adopt for themselves numerous forms of regulation and rules of behavior — called “governance” in economic jargon — doing so independently of government or without being told to do so by corporate bosses.”

Also true.

There are many forms of “regulation”. Ostrom and Williamson both are cautious of government regulation, but as the Times states neither argued against regulation and in fact argued in favor of an emergent self-regulation. Nobody is accusing “anti-regulation folks” of anything, as Boaz suggests. In fact nobody is even talking about “anti-regulation folks” at this point in time – they’re congratulating Ostrom and Williamson, who have researched an entirely different set of issues.
kebko October 14, 2009 at 10:16 pm: Daniel, Boaz’s point is clear & valid. Did you read his article? His point is that if you define regulation the way you are here, then no reasonable person is against it.

That being said, I’ve often thought that markets should be more commonly referred to as regulatory systems. The problem is that they regulate so well that their regulatory effects are taken for granted. When we interact with markets, the changes we encounter are so reasonable, we think, “Well, of course that’s the way it should be done. That’s not some special mechanism, that’s just common sense.”, not accounting for the fact that with non-emergent regulatory systems, non-reasonable demands inevitably collect one upon another.