Regulation is a major topic of the day due to the current economic disaster the world faces. Poor regulations. No regulations. Incompetently or intentionally un-enforced regulations. Even, too much regulation. They have all been blamed for the debacle.

This debate over “To Regulate or Not to Regulate” has been going since Alexander Hamilton and Thomas Jefferson wrangled over it. With this endless debate, the pendulum swings. Slowly to be sure, but it swings from one extreme to the other. It never stops in the center, even to say hello to the sanity that might be lurking there. In fact, most of the recent debate has been about ideology rather than policy, so the policy sort of swings back and forth on a predictably familiar path.

The ideological debate goes this way. On the right the marketplace is revered with religious fervor. The market can fix anything and anything it cannot fix, should not be fixed. That’s the extreme view of it. Regulation interferes with the marketplace. Ergo, regulation is bad.

The basic theory behind that point of view is not bad. People working in that market place can be relied on to look after their own best interests and that is a strong assurance they will avoid reckless, feckless, silly or criminal behavior. In a perfect world with perfect human beings, it might even work that way.

The other ideological extreme of this regulation debate is that it is NOT a perfect world, people who run corporations may even sometimes be good people, but corporations’ only purpose and motivation is to drive up profits. Thus, forces of competition will ultimately overcome self-imposed resistance to the temptations of greed. The market tends to drag everyone down to the lowest common denominator. In addition, eventually the marketplace – left to it’s own devices – will encourage monopoly and whatever magic the marketplace may have – to provide lower prices and innovative products for consumers – will be lost. Government regulation is the only way to protect the public. Or so this side of the argument goes.

Whatever happened to the word “Harumph?” It would come in handy right now.

Our problem is there is some truth to it all. The Marketplace is amazingly magical in so many ways. In a totally unfettered marketplace, however, there is great danger that some of the players will devolve into ravenous raptors laying waste to the very principles on which the market is supposed to work. Theodore Roosevelt was the first President to do something about that.

Well, we forgot history and we are reliving it.

What we have needed all along was not this ideology rumble about whether to regulate but a serious debate on what, when and how to regulate. Of course we need some regulation some times. No one would argue that we should stop painting yellow lines down the middle of our roads; that the common sense of drivers would lead them to sort it all on their own: the marketplace of traffic.

However, I am convinced that by the time I got to Congress in 1979 commerce in the US was way over-regulated. By that I mean regulations grew like barnacles on boat bottoms, they were often arrogantly and stupidly enforced and they interfered with what the marketplace, in fact, could do for the consumer.

Jimmy Carter deregulated the airlines. Those of us who fly regularly remember how we used to complain about airline food. Those were in the old regulated days when you still got any food. Then, enter Ronald Regan. That regulatory pendulum had gone about as far is it could go in one direction and he gave it a big push back in the other direction. It swung just as he hoped. It sailed back and as it went it cut regulatory red tape with abandon. It showed no sign of stopping until …

… well, until now.

There are few – certainly not President Bush – who will not acknowledge that we went from over-regulation to over-de-regulation without blinking an eye. Without harboring a doubt.

Now we have a choice. We have already started to re-regulate the financial industry. There will be more. I would argue there needs to be more. But here is the worry: will we know when enough is enough? Will we know when we’ve accomplished all that regulation can do and it is wise to let the market do the rest? The history on this issue does not bode well in that regard.

I fear we will hear again the familiar and largely irrelevant debate over whether to regulate. You know the “You’re a Socialist” and “You’re a toady of the Corporations” debate.

What it would be heartening to hear is a what, when, why, and 4316 Stevens Battle Lanehow discussion. I think House Finance Committee Chairman Barney Frank (D-MA) is in an ideal position to lead it. His counterpart, Ranking Member, Spencer Bachus (R-AL), has always struck me as a down to earth conservative. It would be a great new year if we began to hear the Committee debate what should be regulated, what kinds of regulation would be most effective and least intrusive, and when we have regulated enough. That is a meaningful debate. One I’ve never heard.