Debunking the "regulations burden business" argument

In a discussion of the provocative Wall Street Journal headline “Study: Strict Derivatives Regulation Could Cost 130,000 Jobs” John Parsons and Antonio Mello point out, "It’s always possible to ignore the system-wide purpose of a regulation and claim it is costly due to the burden it imposes..."

Not everybody cares about the Dodd-Frank reform of financial derivatives markets, but we've seen what happens without regulation(s): the markets crashed, foreclosures destroyed home values, and millions of our friends and neighbors are unemployed.

It's costly to control immigration, to restrict alcohol sales, enforce speed limits, verify the safety & efficacy of drugs, and register voters, but we choose to do all these things because we know we can't simply trust everybody to do the right thing.

Why should you care? How much is at stake in this smoke and mirrors game of derivatives trading? $600 trillion. Compare that to the debt-ceiling, or the budget for the entire U.S. Government. $600 trillion is in play. That's why the players, and the Chamber of Commerce, are lobbying so hard to be left alone, and trying to scare us with more jobs lost.

"...there is 'no upside' to imposing margin requirements on end users, said David Hirschmann, who heads the U.S. Chamber’s Center for Capital Markets Competitiveness."

Victoria McGrane

Wall Street Journal February 13, 2011

Study: Strict Derivatives Regulation Could Cost 130,000 Jobs

Recovering our standing as the world leader in agriculture and industry, and creating the millions of jobs our country needs, won't be enough to keep Wall Street greed from ruining our economy. Can the financial markets "create prosperity" beyond Wall Street? It's hard to prove, lately; it's hard to see any upside in leaving those with the most to gain in charge of regulating themselves when they've already abused the system, or trust the tired old assertions about "burdens on business" so quickly, thoroughly debunked by simple logic.

Thomas Hayes is an entrepreneur, former Congressional Campaign Manager, strategist, journalist, and photographer who contributes regularly to a host of web sites on topics ranging from economics and politics to culture and community.
You can follow him as @kabiu on twitter.