Alright. So just in the past couple of years, we’ve seen two HUGE disasters that negatively affected hundreds of thousands (probably millions) of people (livelihood AND health-wise) emerge because of deregulation, yet there are people who would still support it? I’m confused. Am I missing something here?
Communist!
Unfortunately, it’s not that simple. The disasters were caused by incompetencies of companies and government institutions, not following the rule of law by both parties, political greed, monetary greed, not understanding behavioral economy – well, I could go on.
The real challenge for all of us to look at these disasters with fresh eyes and leaving our ideologies at home. A deregulator will blame the government, no matter what. A big government ideologists will always blame companies. The middle is somewhere in between.
Just as an example, look at this think? Is the government to blame for not updating projections? Yes. Is BP to blame for solely relying on government projections that are 6 years old. Yes.
http://www.huffingtonpost.com/2010/06/23/bp-based-spill-plans-gove_n_623606.html
Seriously though, I don’t see the bank bailouts and off-shore drilling as being directly comparable. With the banks you really have two options:
1. You regulate them heck out of them.
2. You let them fail.
The trouble is the middle-ground. Not dissimilar to the health care bill which is propping up the insurance agencies, the real hindrance to universal health care in the US. Bailouts and propping up troubled corporations are not long term options.
With the oil situation, regulation was to be in place to ensure safety, and this simply hasn’t been happening. Given the differences, I don’t see deregulation having the same effect as the banks. Letting a bank fail due to poor investments would cost them their existence, a sure enough penalty that management and shareholders would seek to avoid. But the oil companies have too much money and far less penalty for failure. Worker death and pollution? That’s just collateral damage. Deregulation in that industry would just lead to them taking their chances of lawsuits and fines rather than working to avoid harming lives and our planet. Perhaps if the penalties were more harsh.
the problem with ideologies is that you can frame almost anything to fit with your view point. The news channels don’t help as they use people with ideological view points to frame stories.
Some people think government is bad and can find a reason that government screwed this up. I think government is good and look for answers that help government run better.
I feel like the problem is more a lack of critical thinking where we all get stuck in our ideological trenches just trying to win the news cycle.
Surely you wouldn’t interfere with the Hand Of God. Regulating these things would just make him angrier!
Well, the fact that you’re dealing with Texans and good ol’ country boys from Loozanna. Perhaps you need to factor that in.
The problem is that it’s true that regulation is bad for the markets, because it adds costs. Of course there is an optimal way to regulate and regulation is only bad when done irresponsibly and with the idea of cutting down profits for no reason, like it happens in many socialist countries in south america.
So the debate between deregulation and regulation has turned into a black & white thing. It’s either lot’s of regulation or none (in the debate) when it should be about what should be regulated and in which amounts.
For example, The BP oil spill could have been avoided with more technical regulations on the processes of extracting oil. The problem comes when regulation tries to avoid innovation (excuse or reality?). For example, on the book Switch by the Heath Brothers there is an example of how BP went from not finding any wells after drilling to a “no dry wells” policy, which was apparently good. If it should have been regulated probably this innovation wouldn’t have been possible. So regulation adds complexity and it’s hard to say where regulation will be effective (in this case).
Now, I’m in favor of regulation in the financial and extractive industries and also in many industries that deal with information they may affect people. But I see the problem is in how regulation is debated. Tara, you tweeted a video for a Ted Talk yesterday that was about how to go back to democratic debate, and I think if we are able to bring those qualities back to the debate on regulation it could end in a productive regulatory laws and processes.
So I think the debate should go not on the line of “good vs evil” on regulation, but in which areas need regulation in order to prevent the crises we’ve experienced and also some futurology is needed to see the possible flaws of the system and be ahead of them. Everyone could see the economy was overheating in 2006 and 2007 and yet little was done to stop the recession or soften it a bit.
Will politicians get to that level of debate and will big companies collaborate to a better environment? They haven’t until now, but I really hope they do.
On the other hand I think it’s easier and probably will have more impact if we come up with a form of market regulation that it’s really effective. So if we see some companies not following a recommended process then we don’t buy from them or any of the products. So far our market regulation hasn’t have any substantial effects in this cases.
So all this ideas that are generated around regulation are the ones that are being used to polarize the debate in to a good vs bad, when we already know some markets need regulation. And what we should be debating is how and by whom, so regulation doesn’t prevent any innovation – and I mean good innovations and not the really doubtful new products as the ones created by the banks-.
The problem with bank regulation is in no way solved. Investment people brokers and entreprenuers are so much smarter than the guys the Govt can hire to scheme out and write investment banking and trading regulation, its an un-dynamic slow process carried out by less imaginative and plodding people. While they are writing it the investment bankers have already found a way to circumvent it or have found and used so many loopholes. Legislators dont understand the tricks. There will always be more incentive to break the law rather than make the law.
@Donna, that’s the normal excuse, but why did better regulated banking systems (like Australia and Canada) not have the scale of deregulated systems like the US and Europe? It’s easy to say “regulation can’t work” till you look at the history of it actually working.
For the mostpart, I don’t think that we need more regulations. We just need for the regulations to be enforced.
OK. You’re crazy.
Seriously, though. Is there something specific that you think was “deregulated” that is the cause of these disasters?