In the aftermath of the financial meltdown of 2008-2009, many people believe that a lack of regulation and oversight by government agencies such as the Federal Reserve Bank and the securities and Exchange Commission (SEC) played a major role in causing the crisis. From this perspective, the financial crisis was hastened by more than two decades of U.S. public policy that moved away from regulation in rhe name of less government, fewer regulations, and a more free economy.
Critics argue that a deregulated market allowed a wide range of suspect financial practices that are associated with some of the largest business failures in world history. weak or nonexistent government regulation failed to protect the economy from the "off-book partnerships" made famous by Enron; the sub-prime mortgages that led to the collapse of three of the largest investment banks in the world, Lehman Brothers, Bear Sterns, and Merrill Lynch; and credit-default swaps that were central to the problems of AIG. Of equal importance, failure to police mergers and acquistions by enforcing anti-trust regulations created a number of firms that were judged to be "too big to fail", leading to huge gaovernment bailouts. Indeed, many critics claim that the deep recession of 2008-2009 was directly related to failure of unregulated markets in such fields as finance, real estate, and the auto industry.
Defenders and critics of deregulation agree that a healthy and efficient economy is the best means for maximaizing the overall social good. They disagree on whether a healthy economy is one that leaves the market free of government regulation, or one in which governement regulators play an active role. Given that this issue isnt a simple matter of regulations or not, but involves a range of options along a continuum of less-to-more regulation, do you generally support more or less government regulation of economic markets?
Questions:
1. What facts are relevant in answering this question?
2. Does it depend on the type of regulation or the industry being regulated?
3. How would you decide if a regulation is successful? A failure?
4. What values support a policy of deregulation? What values count against it?
5. Other than the industry regulated, who are some other stakeholders that might be affected by government regulation?
6. What might serve as an alternative to governement regulations?
7. Can professional codes and standards play a role?