Here’s a letter that I sent yesterday to the Wall Street Journal:
Thomas Frank worries that, if Uncle Sam creates “One Big Regulator” for financial markets, this czar will be an industry insider who does more harm than good (“The Real Danger of ‘One Big Regulator’,” Nov. 11). Frank is right to worry. But his solution (as far as he even bothers to suggest one) – basically, hoping that appointees to the post will unfailingly be noble and wise public servants – is childish.
Even if we can imagine a super-regulator operating in ways that increase the efficiency and stability of financial markets, the prospect that he or she will be either inept or dishonest is far too great to risk concentrating such enormous power in a single person or agency. In practice we must reckon on realities and not on fantasies.
So in fact we must reckon on the allure of power to those who greedily crave authority over others; we must reckon on power’s corrupting influence; and we must reckon on the imperfections that mar even the finest individual’s knowledge and judgment. These unavoidable realities of the human condition will result in this “One Big Regulator” – whose hands, at best only loosely tied, will be on all of the nation’s financial levers – injecting into financial markets systematic risks far greater than those that already exist.
Sincerely,
Donald J. Boudreaux
