DISQUS

Micha Ghertner · 1 year ago

Will,

I find this commentary confusing. First you say that a market is only as stable as the regulations that define it, implying that regulations imposed by the state are a necessary precursor to functioning markets. Wasn't this Cass Sunstein's shtick a few years ago?

But then you return to the Caplanian point at the end of your community, expressing skepticism that the political process can deliver the right regulation. What, then, is the point of pushing for better regulation if you know that the political process is incapable of providing it? Is it not the case that ought presupposes can? And if the political process is incapable of providing what you want it to provide, isn't that a good reason to think it ought not try?

Micha Ghertner · 1 year ago

Oops, that should read: "at the end of your commentary."

Will Wilkinson · 1 year ago

Micha, So you see the challenge. The part at the beginning about treasury securities and the government provenance of the actually-existing market in mortgage backed securities was meant to establish that these markets are creatures of government monopoly and regulation, not outgrowths of some imagined laissez faire. I take it for granted that financial markets ARE going to be framed by government regulation in the foreseeable future. I'm not doing ideal theory here. My "Caplanian point" is meant to suggest that it is wrong to be confident that regulation can be done without eventually causing problems like the one we're having.

Will Wilkinson · 1 year ago

Let me say that the main thing I'm trying to communicate is that our markets ARE politically saturated, that that has caused our problems, and so we can't count on politics to fix it. Nor can we count on the markets to fix themselves, since they are so thoroughly political creatures.

Micha Ghertner · 1 year ago

I agree with that message, but I don't see how framing the issue as "We don't need more regulation or less" communicates that message accurately. Calling for the "right regulation" is sort of like calling for the election of the "right politician", with the implication that if we just get our hearts in the right place, care enough about the issues, and vote for the right candidates, all will be well, all the while ignoring the structural incentives that monopolies of power inevitably create.

I'm not asking that you to do ideal theory here, but the unideal theory as it has been presented seems incoherent to me. If the problems were caused by government regulation and intervention in financial markets, then what good does it do to call for better regulation? Isn't better regulation the impossible ideal here? And how will we ever get any closer to laissez faire if we continue to take the status quo for granted and are too afraid to question the premise that the economy needs government regulation in the first place?

Will Wilkinson · 1 year ago

I think we agree. I am saying what you are saying. Perhaps I was a bit too indirect for your taste. I was trying to create cognitive dissonance: we need the right regulations, but we aren't going to get them. The hope, rhetorically, is that that kind of dissonance (incoherence!) will make the audience slightly more receptive to the resolution, without forcefeeding them the resolution, which they will resist. You have to be gentle on NPR.

S.E. Hassan · 1 year ago

Unfortunately the use of that dialectic appears to lead individuals not to question whether more government is really the best answer. It seems like it would lead them down the path of accepting "bad regulation" instead of demanding no regulation.

Any real cognitive dissonance would come in the form newspeak. A delusion of their minds that would manifest itself in their speech and maybe actions. "I don't mind giving up liberty for a little bit of freedom".