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Abolish the SEC
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From the "The Government Can't Protect You" File, Example Number ... well, pick a number. This time, though, it's the Securities and Exchange Commission failing to protect private investors from fraud allegedly committed by Bernard Madoff.
The Securities and Exchange Commission has faced heavy criticism over its failure to discover the $50 billion Ponzi scheme allegedly run by Madoff, the prominent Wall Street figure and money manager now fallen into disgrace -- despite credible allegations against him that were brought to the agency over the course of a decade. Against the backdrop of the worst financial crisis since the 1930s, the SEC also is accused of contributing to that disaster with lax oversight of Wall Street and the markets, and lawmakers of both parties are calling for a shake-up of the agency to help restore investor confidence.
Writes a buddy of mine: "Thank the lord we graciously and willingly give so much of our tax money to the SEC. So they can ignore 10 years of warnings with respect to Madoff. Seriously...how much worse would it be without them?"
The fact of the matter is we will be much better of just as soon as we learn to place less trust in government regulatory agencies, not more.
Just as it was the market, not the SEC, that discovered Enron's shenanigans, so too the Madoff debacle. But there's no shortage of outrage from politicians and bureaucrats, who pretend that the Fed's expansion of money and credit, in addition to federal regulations giving investors a false sense of security, have nothing to do with corporate fraud.
The state represents tyranny, which is the polar opposite of freedom. Therefore, whenever there's a problem, a good rule of thumb is to do the exact opposite of what the government suggests. Whereas the scandals at Enron, Tyco, and WorldCom led directly to the putrid Sarbanes-Oxley Act, don't be surprised if federal lawmakers exploit the Madoff case to add even more layers of auditing requirements to regulations that are ineffective to begin with.
Increased competition between private investment firms, not heightened bureaucracy in the form of tighter reporting requirements and disclosure rules, is the remedy if the actual goal is a freer market. Sadly, I'm hardly confident that's the case when it comes to the state.
