Monday, September 22, 2008

The Regulators

Regulation can be an economic burden. The recent study by Rafael La Porta et al. is the latest of many interenational cross-sectional examinations that supports this view. Sam Peltzman is best known for his work on the dark side of regulation. And regulation in the U.S. has been rising during the G. W. Bush years.

In this morning's WSJ, Lanny J. Davis articulates the popular view that we have not had enough regulation. While L. Gordon Crovitz notes that Wall Street firms fell down because "For decades, the large Wall Street brokerages had armies of analysts who, when they did their jobs right, asked the hard questions and issued tough reports that often alerted both company executives and public investors to market moving issues. There are now half as many Wall Street Analyists as in 2000. Former NY Attorney General Eliot Spitzer eviscerated the profession with $1.4 billion in settlements and a new mandate for how the industry would be structured."

To be sure, Spitzer was a "regulator".