For those of you who haven’t heard of him, Paul Singer is a very conservative man. Just look at his resume. Board member of the preeminent right wing publication Commentary, Chairman of leading free market think tank The Manhattan Institute, and occasional op-ed contributor for the Wall Street Journal.
So imagine my surprise when Mr. free market penned a column in today’s Wall Street Journal which not only places the brunt of the blame for the financial crisis on the private sector, instead of “minority homeowners”, but also calls for an increase of more government regulation.
While many of Mr. Obama’s ideas warrant skepticism, conservative opposition to any expanded role for government is a mistake. There is an urgent need for a new global regulatory initiative that addresses the primary cause of the financial collapse: highly leveraged and concentrated positions.
Reform must begin with a regulatory regime focused on “behavior” instead of “systemically important institutions.” Today, even small entities that trade complex instruments or are granted sufficient leverage can threaten the global financial system.
It’s true that monetary policy was too lax for too long, and the government encouraged lending to people who were unlikely to repay their loans. But this crisis was primarily caused by managements and individuals throughout the financial system who exercised extremely poor judgment. The private sector, not the public sector, is where the biggest mistakes were made.
Holy crap! Happy birthday to me…
The rest of Singer’s article is pretty good. In fact, when compared to the typical conservative argument, Singer provides several specific policy recommendations to fix our current broken system
But his basic point, that the free market can benefit from regulation, is a point worth repeating. What often gets lost in the conversation about regulation is the fact that a regulation is just a law that applies to businesses instead of individuals. But we have laws that govern individuals because without them we’d live in a chaotic society. The same is true for the free market. Can you imagine what would happen if a business just decided that it wouldn’t pay another business for a service rendered. Or if copyright laws didn’t allow pattens on new products? Luckily, you’ll never have to because the government, through regulation, stops these things from happening.