Comments on: Maybe markets need more principles and less regulation

By: Emanuel Derman

Emanuel Derman — Thu, 27 Oct 2011 16:27:15 +0000

Tconnor:

You misunderstand me, or perhaps I wasn’t clear. I’m not asking for voluntary compliance. I’m asking for simple understandable constraints based on principle rather than 1000s of tic-the-box regulations that don’t help. A clear punishment (by law or market) is worth a 1000 regulations.

By: Emanuel Derman

Emanuel Derman — Thu, 27 Oct 2011 16:25:26 +0000

RE ChipShopping:
I didn’t pick the title. That’s New Scientist’s prerogative.

By: Amincd

Amincd — Mon, 24 Oct 2011 10:35:55 +0000

Great explanation.

By: Amincd

Amincd — Mon, 24 Oct 2011 10:35:08 +0000

This is an excellent article.

The principle the economy needs to rely on is to have a government that does not arbitrarily intervene in the market, does not tax or restrict the economy to subsidize a particular group, does not regulate for the purpose of controlling risk, and upholds the rule of law, meaning in consistent in its enforcement of the law.

Unfortunately the cliche of “we need a highly regulated economy because people are selfish” is widely believed in, and has led to a highly regulated economy where people have become complacent and depend on regulatory agencies to manage risk for them.

By: ChipShopping

ChipShopping — Sun, 23 Oct 2011 20:16:39 +0000

I read your Article in this weeks NewScientist ‘Unruly Humans vs the lust for order’ and it left me feeling exasperated with you. The luxury of the educational insight you received, which highlighted the perils of believing your Maths models, has probably come quite cheap to you. Personally I teach Maths to school children upto the age of 18 years old. Some of them use Maths to develop mechanical and statistical models as a part of the courses they study. I start from the point that they need to understand that the map is not the territory, and get them to describe the limits of their models. This perseverance with accuracy and caution has served my students well. You and your colleagues (in the financial sector) lack of perseverance has cost me some of my salary this year and is about to cost me, my family and my professions long term security because of the changes in the terms and conditions to my pension. Hindsight is a wonderful thing, when you have been made wealthy from creating the illusion of knowledge.

The title of your article in the NewScientist also seems to be a pragmamorphism. The human mind seems (from what I perceive) to group like and unlike. This is not ‘Lust’.

By: Nullcorp

Nullcorp — Sun, 23 Oct 2011 16:56:27 +0000

The comments from herelam2005 are exactly right:

“[The] market can never be free, just as human[s] can never be angels, regulations are necessary evils.”

The author of this post is way too idealistic. Everybody in the world is out for one thing: to take all that they can. People lobbied for less regulation in the late 70s and 80s. It took decades for it to become apparent that deregulation was a really bad idea.

Read “Demonic Males,” great primer on evolutionary biology, a field that will eventually undo a lot of our naivete about people playing nice with each other. The only thing that will truly get people to play nice is a power much bigger than them: i.e. the law. But who will watch the watchers? Well………

By: txgadfly

txgadfly — Sun, 23 Oct 2011 03:53:40 +0000

Principle: if you tolerate thieves masquerading as merchants or bankers, you will not have markets, efficient or otherwise.

Principle: punish the criminals (Bankers) not the victims (shareholders).

By: tconnor

tconnor — Sat, 22 Oct 2011 05:55:27 +0000

This post is unbelievably naive. The same logic can be used to disband the police. Just tell the criminals to be nicer. And we could entirely disband the military! We’ll just give a set of principals to our enemies.

Human beings are a defective species. Relying on voluntary mechanisms to eliminate anti-social behavior is ridiculous. And there is very little about large sums of money –which are a form of power –that brings out our better selves.

By: hereiam2005

hereiam2005 — Sat, 22 Oct 2011 01:24:50 +0000

The very reason why principles doesn’t work is because principles are voluntary. Principles are rational restrains, similar to the voluntary restrain from committing crimes in modern society. Problem is, those who are not bounded by principles always have better short term profit than those who are. And principles only work when they are universally applied, just as restrains must be universally applied, by force if necessary. That is why we have law. Tax must be universally enforced. If not, those who avoided it will have unfair advantages. In free market, regulations are evil. But market can never be free, just as human can never be angels, regulations are necessary evils.