What Good Are Regulations?

Have you ever noticed how advocates of the regulated society never admit that their regulations have failed? Consider the Enron case, in which one of the biggest companies in the United States has gone belly up as a result of questionable financial practices. I thought the purpose of government regulation was to eliminate that sort of thing. It obviously doesn’t, and so what good are the regulations? The answer of the regulators is always the same: that this only proves that we don’t have *sufficient* regulations — if we had more regulations (and more money for the SEC and other regulatory agencies), then this sort of thing wouldn’t happen “as much.” What they fail to consider is the deceptive aura of security that the regulated society engenders in people. In the absence of regulations, bad things would still happen in the marketplace, but at least people would be more alert to the possibility that things can go wrong and would not be lulled into a false sense of security by the paternalistic welfare state.