Discussion about this post

User's avatar
Overcoming Bias Commenter's avatar

"Although these appointments are certainly political in nature, there are significant cultural and reputational pressures on the appointment process to ensure the hallmarks of legitimacy - specifically, politicians must be sensitive to institutional pedigree, demonstrated competency, education level, bipartisanship, etc. People with graduate level training in public policy, economics, or substantial experience in banking would be good candidates.""Hallmarks of legitimacy" are not enough. Life is not that simple. Suppose there is disagreement on regulatory theory, policy, scope, political viability, historical records and interpretations of success/failure, economic theory, conflicts of interest, privacy and security issues, monitoring, priorities, resource allocation, independance from industry, etc? Will everything still be hunky dory? "Cultural and reputational pressures" would have to include all pressures, good and bad, such as "stock libertarian ideology" (ex: Ron Paul and the Fed). These pressures also exist for private firms, and perhaps more so if they are not simply assumed to be as competent and trustworthy as regulators apparently are. Indeed, why not just say the social pressures are redundant, if all these highly educated regulators are so competent and knowledgeable? Can't we just trust them to do the right thing, sans a profit motive?

Last problem here is that regulators are not acting in a static, textbook modelled environment. They are competing with the movers and shakers of the financial industry. The regulatory framework exists within a game - it does not simply define the world from the outside. DrModern's views sound a lot like Plato's 'Republic'.  

Expand full comment
Overcoming Bias Commenter's avatar

That is a question that Robin can't answer, because when you are trying to game the system, the first rule is never talk about trying to game the system.

That was a great link about Jane Jacob.

Expand full comment
27 more comments...

No posts