Eliot Spitzer has helpfully laid down the principles of his governing philosophy in an essay (taken from a speech) for Boston Review. Here are the bullet points:
• Only government can enforce integrity and transparency in the marketplace; self-regulation is a failure.
• Only government can take necessary steps to overcome market failures, such as negative externalities or monopoly power.
• Only government can act to preserve certain core values in the market, such as prohibitions on discrimination.
...etc. It's useful to have these rules compiled in one place for future reference.
Of course, saying that only government can serve some purpose is not the same as saying that government does serve that purpose. For example, why did government regulation fail in the most recent crisis? Spitzer explains:
Regulators don't need additional power, they just need to use their existing power appropriately. And this will not happen unless different people are in charge. We are going through a huge regulatory reshuffle because what went on was absolutely horrifying. But all the laws and regulatory reforms will not matter at all unless we put in charge people who actually believe in enforcement.
So government can regulate effectively, but it hasn't and it won't unless we find the right people. Mike Konczal of Rortybomb takes that point a step further:
And one of the smartest tactics that the conservative movement has brought to discrediting government over the past 30 years is putting industry lobbyists in charge of running their own agencies....
(There's a lot of work in the sociology of finance/economics about performativity, and the question "do economists make markets?" I think it's pretty interesting when it comes to option theory. But I think it's most interesting that the modern conservative movement has made Public Choice theory ‘come alive' by stuffing the government's regulators with crony industry insiders and lobbyists. Which way does the mirror reflect?)
So when you think about what a CFPA will look like, you can't look at it thinking Elizabeth Warren is going to run it - you need to look at it and think that President Sarah Palin is going to appoint a credit card executive to run it in 2012. Someone who wants to be part of the revolving door with the banks, and someone who really believes, in their heart, that poor people in America are "lucky duckies."
If we only had ineffective regulators when the conservative movement was picking them, then indeed it could be conceivable that the "mirror reflected" the other way. But in reality regulators do similarly badly when good governance-lovin' Democrats appoint them (c.f. the Spitzer piece), which indicates that regulatory failure is not in fact a conservative plot. No, the reality is that regulators will be chosen for political reasons and not based on qualifications. Philosophies like Spitzer's do not account for that reality.
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