Deregulation Isn't Meant to Be Thoughtless
No one is doing more harm to the cause of limited, small government than man-children poring over code and deleting spreadsheet rows with impetuous glee. While cutting government this way requires some thought, one could probably train an ape to turn on a computer, push a few buttons, and sack thousands of workers at a time.
Limited government along a path of deregulation demands more of us.
One rightly holds that a nation with a limited government and a larger private society advances individual liberty and common prosperity. That limited government and that prosperous private society are not, and cannot be, simply thoughtless.
Hayek sensibly contended that some planning (preferably of private individuals) was needed in any system:
It is important not to confuse opposition against central planning with a dogmatic laissez-faire attitude. The liberal argument does not advocate leaving everything to 'chance,' but is based on the conviction that, where effective competition can be created, it is a better way of guiding individual efforts than any other. It is significant that those who talk about ‘planning’ most frequently mean central direction of all economic activity according to one coherent plan—what is required in a competitive system, however, is planning by individual entrepreneurs.
F.A. Hayek, The Road to Serfdom ch. 5 (Univ. of Chi. Press 1944).
An extension of Hayek's insight comes to mind when reading Matt Levine's latest Money Stuff newsletter (You Need Regulators to Deregulate, 3.13.25) where he reminds of what happens (quoting Bloomberg reporting) when someone simply stops regulating:
While the agency’s headquarters stands dormant amid a halt-work order, its rules — ranging from major new edicts to dozens of small points of guidance which companies are loath to go against — are still in place. Financial firms can face penalties from state authorities for running afoul of them. And they remain at risk of being punished by regulators for breaking rules after President Donald Trump’s term ends.
Lobbyists for banks and mortgage companies have contacted Trump administration officials with a request for acting director Russ Vought: Turn the lights back on and get to work rewriting some regulations.
“The CFPB [Consumer Financial Protection Bureau] has work to do, like undoing rules and withdrawing proposals and guidance,” said Ian Katz, a managing director at Capital Alpha Partners in Washington. “I don’t know that initially the White House totally appreciated that. I just don’t know if Russ Vought was thinking in those terms or not, but clearly if you want to rescind rules you need people.”
Levine observes that
You can go a long way toward creating an atmosphere of lawlessness by stopping enforcement of the laws, but banks do not actually want an atmosphere of lawlessness. They want laws! Just ones they like. (Again, this is true of crypto too.) To give them the regulations they want, you do need some regulators.
One needs regulators to wind down rules whether banks have the regulations they want (as capture) or regulations that they don't want. The best choice for a society is thoughtful private planning rather than state regulation. With state regulation, however, the path to deregulation requires thoughtful, considered reductions.
Deregulation is more than pretending there are no regulations or waving a chain saw in the air as a substitute for rational deregulatory planning. An ape, a chimpanzee or a gibbon, for example, could wave a chain saw in the air, and with greater dexterity than one has recently seen...