However You Can Get It

A few hours ago, Barack Obama gave a speech on financial regulation. As always, he’s a strong speaker.  But I have to take issue what some of what he said.  For example:

But the American experiment has worked in large part because we guided the market’s invisible hand with a higher principle. A free market was never meant to be a free license to take whatever you can get, however you can get it.

This is a straw man.  No one ever claimed that’s how things are or should work. Free market advocates aren’t promoting absolute anarchy, nor anything much like it. And that’s certainly not what we’ve had in place, either, so it’s not got anything to do with our current situation.

On the other hand, a free market should mean being free to conduct business — and take the risks that come with it — without regulators standing over your shoulder and without massive compliance costs.  Sarbanes-Oxley, for example, the last major financial oversight law, has been estimated to have cost $1.4 trillion (yes, with a T) dollars.  Compliance costs have been estimated at an average of about $2.4 million a year per company.

No wonder advocates of stricter regulation tend to gloss over the costs involved. And yet Obama’s solution is… more regulation.