The Securities and Exchange Commission knew that Texas-based financier R. Allen Stanford was probably running a Ponzi scheme 12 years before it halted the fraud. … Top officials in the agency’s Fort Worth office favored pursuing as many simple cases as possible rather than taking on more challenging ones like that presented by Stanford. The internal report also raised questions about a former head of enforcement in Fort Worth, Spencer Barasch, who played a “significant role in multiple decisions over the years to quash investigations of Stanford,” but then “sought to represent Stanford on three separate occasions after he left the Commission.” (more)
A few days ago I listed some examples, mostly on police and soldier brutality, suggesting we don’t seem serious about enforcing many laws; we seem to like having law enforcement organizations respond to informal social pressure about which laws to enforce how vigorously on whom. We seem to prefer everyone being guilty of something, giving police the power to arrest whomever they want.
Even more than via independent government agencies, the obvious way to ensure laws are enforced is to empower everyone to enforce them. Civil lawsuits, especially class action or with whistle-blower rewards, give everyone an incentive to discover and discourage violations. But we mostly seem wary of private law, preferring centrally-enforced criminal law for most “important” topics. In fact, we go out of our way to prevent natural private punishment of lying.
Yet we do allow private, and hence reliable, enforcement of some laws. What distinguishes the laws we want reliably enforced, from the laws we prefer central elites have discretion to enforce when and where they like?
This example seems inappropriate. What reward is there for someone exposing a ponzi scheme? What reward is there when there is no money to be had? On the other hand, one can get an inkling of them by watching incoming spam.
Because it is a signal for low status.