The core problem seems to be “legislation by delegation.” The Dodd-Frank act and the Affordable Health Care act are both wish lists of Utopian objectives with no details about how they might realistically be achieved – plus the assumption that they are in fact achievable. A couple of examples from Dodd-Frank:
SEC. 714. ABUSIVE SWAPS.
The Commodity Futures Trading Commission or the Securities
and Exchange Commission, or both, individually may, by rule or
(1) collect information as may be necessary concerning
the markets for any types of—
(A) swap (as defined in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a)); or
(B) security-based swap (as defined in section 1a of
the Commodity Exchange Act (7 U.S.C. 1a)); and
(2) issue a report with respect to any types of swaps or
security-based swaps that the Commodity Futures Trading
Commission or the Securities and Exchange Commission determines
to be detrimental to—
(A) the stability of a financial market; or
(B) participants in a financial market.
What information is “necessary”?
How does the CFTC know what “types of swaps” will be detrimental to “the stability of a financial market”? Economists disagree; no one really has a clue.
How does the CFTC know what will affect market stability? Likewise.
‘‘(12) PROTECTION OF MARKETS AND MARKET PARTICIPANTS.—
The board of trade shall establish and enforce rules—
H. R. 4173—346
‘‘(A) to protect markets and market participants from
abusive practices committed by any party, including abusive
practices committed by a party acting as an agent
for a participant; and
‘‘(B) to promote fair and equitable trading on the contract
What “abusive practices”?
What “rules”? How will the CFTC know the rules affect all and only the abusive practices?
What is “fair and equitable trading”? Opinions differ.
The Affordable Health Care act has many similar examples.
Laws like this simply delegate authority to an unelected body of regulators who are assumed to be omniscient. They provide the illusion of regulation with the reality of a madhouse in which interested parties create a morass of blind if not self-serving regulations which will certainly fail in unpredictable ways. Our legislative system seem to be broken in ways that Niall Ferguson has well documented.
(Wall Street Journal, June 25, 2013, full version)