John Tamny speaking about the political economy

The success of capitalism means that many are allowed to do things that have nothing to do with productivity. And from government and academic elites that frequently seek to undermine the very system that enabled their cushy jobs, to foundations created by capitalist profits that often dismiss same, the commercial success wrought by the pursuit of profit has created an unproductive elite that lives off the very business profits that it regularly casts a skeptical eye on. . .

Washington [is] the place for lesser minds. . .

The irony of a government that fostered our financial destruction overseeing its resuscitation has seemingly never troubled Bernanke, so now the very regulations that failed so impressively when it came to rooting out previous financial mistakes will be expanded. What’s rarely asked is how the very people who achieve stature through something called “pay grades” could ever successfully regulate those who make millions by gaming those same regulations and regulators.

Once this is considered, it has to be remembered that a bigger regulatory state simply insures that there will be more big failures, and more Bernie Madoffs to contend with. Regulations, rather than a deterrent when it comes to nefarious activity, actually encourage it for the existence of rules that sharper minds in the private sector will always work around. Regulations merely tell those eager to cheat or take excessive risks what they’ll have to comply with while cheating and taking excessive risks.

Better it would be if Bernanke et al were to acknowledge how tragically unequal they are to the task of outsmarting private sector minds. If so, if the regulatory state shows an appealing modesty with regard to its shortcomings, it can be assured that private individuals, with money on the line, will do for themselves what Washington has never been able to do.