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… is from pages 56-57 of Roger Koppl’s indispensable 2014 monograph, From Crisis to Confidence: Macroeconomics after the Crash [2]:
It seems to be implicitly assumed that the imperfections that exist in markets do not exist among those who might seek to intervene in markets. Yet it is clear from the crash that regulators suffered from the same herding tendencies as market participants, suffered from lack of perfect knowledge and that there were lags before regulators acted, and so on. Any rounded theory must make realistic assumptions about market participants and those operating outside the market who seek to regulate it.
Yes. Turning matters over to government does not render reality optional or transform humans into super-humans. Turning matters over to government does not make miracles occur [3].