Recommended Reading: “Diminished Returns”:

by Marilou Moursund on June 18, 2009

in blog,Credit Crisis,Recommended Reading

In an article posted in The New York Times, Harvard Business School professor Niall Ferguson argues that financial crises are more often caused by bad regulation than deregulation.  I made some of the same points in my post titled, Who’s Going to Regulate the Regulators?

Professor Ferguson notes that in response to a crisis:

“The usual response is to introduce a raft of new laws and regulations designed to prevent the crisis from repeating itself. In the months ahead, the world will reverberate to the sound of stable doors being shut long after the horses have bolted, and history suggests that many of the new measures will do more harm than good. The classic example is the legislation passed during the British South-Sea Bubble to restrict the formation of joint-stock companies. The so-called Bubble Act of 1720 remained a needless handicap on the British economy for more than a century. “

I am concerned about the long term effects on our economy of the government micromanaging various problem sectors of the economy.

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