The SEC Screwed Up? Who'da Thunk It?

Hmmm...the SEC chairman just said the agency repeatedly failed to probe Ponzi-scheme runner Madoff. Ummm...just one question. Why the heck do we have regulators if they don't catch "bad guys?" Now, you can't say this is the result of the "free-market" because of the observer effect. The mere presence of the SEC crowded-out free-market equivalents. In other words, without the SEC, some group would have to have been formed to perform the same function. What the heck, it might even have been multiple groups.

See, that is the problem with regulators. People assume regulators = perfection. However, money is tight and regulators shirk their duties. Because of the government's monopoly powers, there are generally no punishments for crappy regulators. Unlike employees at UL or JD Power, regulators don't have any incentive to be competent; they aren't liable to the public. And, that is ultimately the problem with regulators gone bad. Instead of saying, "Hey, these regulators suck; we should fire them," we get people saying, "Hey, these regulators aren't working and we need more money and more people to be better." We can never get rid of the regulators; we can only waste even more money.

But what if the regulators caused the problem? That is what I am arguing in this case. This guy forged documents and no one really questioned him because of the mere presence of the SEC. But what if this guy had to answer to a private company checking his books? That company has an incentive to not screw over consumers (and the courts would make sure of it). Sure, these people are going to be helped, but at taxpayer expense. I didn't make a stupid investment; why the deuce should I have to help these fools? That is what happens when regulators become involved. If someone is helped, it comes at taxpayer expense; shouldn't it come at the regulator's expense? Shouldn't someone, or a group of people, who screws up be held accountable, and more than just being fired?

In my vision of the world, that would happen. Alas, we live in this one and people get screwed over. No, not by unscrupulous people; they get screwed over by regulators. (Actually, the regulators tend to be unscrupulous too.) In my world, I prefer setting the rules to strive for excellence; have you started laughing yet thinking of that idea with government?