Regulation’s Legacy

Maybe this is way off, but I think it’s important to account for the effects of operating under heavy regulations on human behavior. Overtime, it’s natural for people to begin to think that anything allowed by a regulation must be okay because otherwise, government wouldn’t allow it. If government opens up the capital requirements, it must be okay to take them to the extreme, otherwise why would they do it?

I think living under regulations causes people to develop unrealistic faith in the ability of those regulations to protect us from any and all risk (especially among those who want government to regulate any and all activities they deem unsafe). It’s the legacy of being over nannied–you forget how to think for yourself and judge risk appropriately.

via Why such extreme leverage?.

This is one of the stories of our age. We are reaping what we have sown.

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