My fascination with this topic is seemingly endless; and seemingly without a shortage of glaring examples with which I can illustrate what is the proper (or, more appropriately: what is the improper) role of “government” between its spheres.
This story today is a prime example.
We are essentially faced with two competing solutions for how to address economic or societal crises. The first goes something like this:
People can’t be trusted; therefore, the activities that people have with each other (even activities seemingly as innocent as a consumer obtaining a mortgage through a broker) must be regulated to protect the parties involved. It is the job, then, of “government” (i.e. distant external, or federal, government) to create the mechanisms to watch, police or otherwise babysit adults in their commercial interactions. This applies to buying a home, obtaining loans, how much you pay for gasoline, if a baseball player is taking drugs, and thousands of other activities. The best way to protect people from themselves and each other is via the creation of bureaucratic entities empowered to interfere in areas that reason would suggest they have no business in.
Or:
We can let the market govern itself. Essentially this is letting the individual govern his or her behavior. Bear Stears goes out of business: wise executives remember the results of greed during the next real estate boom and avoid disaster; and the foolish ones make the same mistake. Then they go out of business, only to serve as a reminder – if you’re bright enough – of the dangers of speculation. The painful correction serves as a regulation of its own, and doesn’t require the plundering of taxpayers to do so, as the prior strategy does.
There are proper responsiblities for every sphere of government, from the self to the most distant external spheres. The more we apply critical thinking in this respect, the more likely we are to foster an environment in which people govern themselves and external government – at least to the degree by which it is enormous today – becomes less important.
