Don Boudreaux on Government Expertise

Much has been written in the last few months about the need for increased regulation. The idea is that Congress should immediately employ more regulatory hobbits, trolls, and munchkins to produce more hurdles for the opponents of their donors.
We need some oversight, dang it. If people want to get rich betting on the probability of dubious mortgages getting paid, we need to support them.

Don Boudreaux, economics professor at George Mason University, and half of the incredible Cafe Hayek blog, asks the following related question:

He asks: What the hell are you people thinking?


He asks, If you wouldn't entrust your 401(k) to a senator, why support political investments in the auto industry?

Editor, Baltimore Sun
Dear Editor:
You opine that Detroit automakers "need to explain in detail to Congress how they intend to eliminate thousands of uneconomical dealerships, swiftly bring their labor costs closer to what Toyota pays its workers in this country, and quickly produce more energy-efficient cars that Americans will want to buy" ("Selling American cars," Dec. 4).

No. These companies deserve investment funds only if they're able to make cars that will sell AND can demonstrate this ability to private investors. Congress is manned by people who specialize in winning popularity contests called "elections." These are not people expert in judging business models, or at pondering the pros and cons of different retail-distribution methods, or equipped to accurately discern the nuances of consumer demands for automobiles, or even – judging from their track record – aware of the most elementary principles of finance and economics.

If, say, you're looking for someone to manage your 401(k), would you entrust that job to Sen. Mikulski or Rep. Hoyer? Of course not, for that's not what they do. So why entrust them and other politicians with the job of investing on a vastly larger scale?

Sincerely,
Donald J. Boudreaux


All of which, of course, is common sense. Some of the people grilling the Big 3 CEO's know more about Eritraean Contraceptive Methods than the do about the economics of the auto industry. But let's take it to a more basic level.
We've been through recessions in the past, and came out of them ok.
Lot's of people got wiped out in the dotcom bubble, but we didn't have rioting in the streets.

I occasionally get wiped out at the blackjack table, and walk away wishing for increased government oversight of blackjack dealers. I, too, have felt the pain of totally undeserved gambling losses due to lack of oversight. There should be laws preventing dealers from pulling a 5 out of nowhere to play on top of their 16.


Speaking of which, do you remember people using the phrase "play the stock market", with the implication that one could lose everything that had been put into play? Much like losing a game of Blackjack, Monopoly, or (ahem) Risk? "Playing The Stock Market" has gone out of favor. We now want a risk-free way to put our money to work so we won't have to work to earn more money.


We are supposedly clamoring for regulation that will produce only winners and no losers. "Money for nothing, and your chicks for free," in the words of Dire Straits.


So which Congressperson or Senator has the gumption to understand the implications of every regulatory pebble thrown into the workings of the Free Market? My vote would go to Ron Paul or Arizona's Jeff Flake.


Are there any others who see increased economic regulation as anything but protecting donors from risk and change?

Let's go even more basic.... At this point, can you honestly say that you would trust, say, Senator Robert Byrd to properly order the Happy Meals for Miss MacGillicuddy's Kindergarten?