September 3 2010
Former Prime Minister Tony Blair was obviously situated to have a good perspective on why we had such a frightening global economic meltdown-and, guess what, Blair doesn't see the panic as a cause for more and more regulation. Quoting from Blair's new book, the Wall Street Journal notes:
In the last chapter of "A Journey," Mr. Blair writes, "First, 'the market' did not fail. One part of one sector did." Then he adds: "[G]overnment also failed. Regulations failed. Politicians failed. Monetary policy failed. Debt became way too cheap. But that wasn't a conspiracy of the banks; it was a consequence of the apparently benign confluence of loose money policy and low inflation."
Mr. Blair also rightly puts his finger on the bigger picture, saying "the failure was one of understanding. We didn't spot it. You can argue we should have, but we didn't. Furthermore-and this is vital for where we go now on regulation-it wasn't that we were powerless to prevent it even if we had seen it coming; it wasn't a failure of regulation in the sense that we lacked the power to intervene. Had regulators said to the leaders that a huge crisis was about to break we wouldn't have said: There's nothing we can do about it until we get more regulation through. We would have acted."
This truth hasn't stopped the global rush to throw more power at the regulators who failed to anticipate the panic or diagnose the bubble.
Of course, those who are regulation-mad tend to want more and more regulation regardless of whether it works. Hall monitors who grew up to be government officials, they simply believe in regulation.