Isn’t the tumbling marketplace a result of the various regulations?

BY busadmin  September 23, 2008 at 10:26 AM EDT

Markets; File Photo

Question/Comment: Hi Paul, isn’t the tumbling marketplace a result of the various regulations? Whether we had fewer regulations recently than in the past, it’s not as though this meltdown is occurring in a free market. If our property, current and future, can be so easily taken, the freedom I enjoy to happily, lawfully make my living is used against me. Why aren’t the Capitalists shouting from the rooftops?

Paul Solman: Are you kidding? REGULATION caused this? I really don’t like to be a wiseacre with thoughtful emailers like yourself, Melinda, but I have to be honest: the suggestion is, in my view, ridiculous.

True, there is no such thing as a free lunch, or a free market. But that means what it seems to mean: we need rules. As Robert Bartley, the late free enterprise evangelist who ran the Wall St. Journal’s editorial page for years once said to me when I asked what he thought the keys to capitalism were: “Number One – the rule of law; number two – the sanctity of contracts.”

Investment banks skirted banking regulations and were leveraged 32:1, more than triple the debt load banks are allowed to take on. The limit is there for good reason. Otherwise, any flim-flam artist with a good patter and a fancy reputation can take the public’s money, take a flyer with it, and then you and I, Melinda, and the rest of the NewsHour staff and audience, pick up the tab. Due to LACK OF REGULATION.

If the government’s going to dole out dough, on our behalf, I sure want it to make some rules about how the dole-ees do business. Don’t you?