How much should governments be involved in creating or countering the indirect consequences of markets?
Should government supplement markets to increase the public good? Think navigating the Mississippi or interstate highways.
Should government regulate markets to protect the public good? Think insured saving accounts and food safety inspections.
Before World War I, Progressives argued against monopolies and unsupervised meatpacking plants. These produced negative consequences for consumers, but regulation added limits to markets and added costs.
If you create a product and dump toxic waste, government needs to impose a cost, which changes the price or the behavior.
Ian Bremmer notes that pricing financial consequences is hard to understand, as is the appropriate governmental regulation. What do CDOs, collateralized debt obligations, mean in terms of unemployment or people's homes?
Regulation is where reasonable people disagree. Over the last decades, the U.S. had a proactive, fairly conservative ideological bent toward protecting financial producers, not consumers.
What do you think? Should that change? Does regulation simply close the barn doors? How much regulation is too much?
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