I haven’t written about the Bernie Madoff fraud – what could I possibly add? But John Hinderaker draws the right conclusion:

Experts who are highly paid to invest money, and whose careers depend on being right, fell for Madoff, to the tune of something like $50 billion. Which is why I am extremely skeptical of the idea that we need more government regulation to avert such losses in the future. No new regulations are necessary to ban schemes like Madoff’s; Madoff’s fraud was already illegal when Ponzi did it. And if hundreds of experts–professionals who bet their livelihoods on Madoff’s fund–couldn’t figure out that he was a crook rather than a genius, why should we think that some government bureaucrat is going to do better?

Indeed. Remember, all this happened in the most regulated industry in the country! While regulation can have benefits, it also has costs. It costs taxpayers. It costs businesses (which pass on the costs to their customers). It stifles innovation. Some people have a knee jerk reaction to every problem – more regulation! People should spend more time thinking about the costs and benefits. Sometimes the cure is worse than the disease – and the cure doesn’t even work!

Megan has some typically insightful views of the Madoff affair and a Madoff investor speaks out.


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