Regulation as Paternalism

Regulation for the purpose of limiting risk is paternalism.

It is easy for statists to point to bad results as a result of de-regulation, because there will always be some bad results when risk is real.    It is hard to point to foregone good results as a result of regulation, because, well, they are not there.    This all means the regulators get a political advantage.

The press displays their ignorance of economics every time they are shocked — shocked! — when some industry is de-regulated and then a business goes bankrupt, or cheats.  See, that proves it!   We have to regulate more, or bad things will happen!   The fundamental relationship between risk and return is apparently impenetrable.

The unstated wish in the statists heart is to deliver to his children only good results.   He is not concerned about maximizing the overall efficiency or production of the system.   He is interested in being at the top of the pyramid, flat as it may be.

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