Business scandals often lead to calls for greater regulation. Yet, as economist Mark Thornton shows, in so many recent scandals, regulators have been among the chief culprits.

Scandalous Regulators

by Mark Thornton

The Democratic Party had its message on the economy well-prepared for the recent election. From President Obama to his campaign directors to campaign advisor-hacks, all the way down to the local party patsies, the message was uniform and well rehearsed. “We do not want to return to the failed economic policies of four years ago. Those policies caused the economic crisis that almost put the country back in a great depression. We cannot return to the naïve policy that deregulation is good for the economy.

The Romney campaign essentially left this crucial talking point unchallenged. When confronted with this charge from the Obama campaign, Romney’s response was to concede that capitalism requires regulation to work, but to insist that the regulation cannot be excessive and burdensome, or ultimately the consumer will be hurt.

This is an entirely unsatisfactory response. The problem is that Romney and his campaign do not really know how capitalism works. They do have some idea of how the actual interventionist economy works. That is the economy where Romney made all his money. However, it is not a platform from which you can see how an economy works without interventions, regulations, and “favorable” injections from the Federal Reserve. Romney made his money during a time of “easy money” under Alan Greenspan.

Read more: mises.org