A Chequer-Board of Nights and Days

Gary Becker makes the case. While he concedes that some regulation may be in the offing, he bravely and cogently argues for deregulation to remain largely intact. The whole thing is worth reading, of course, but the following passage struck me as being especially worthy of emphasis:

In evaluating the need for greater financial regulation, one should also not forget that the American economy greatly outperformed the European and Japanese economies during the past 25 years. Might that not be related in part to the fact that the United States led the way with major financial innovations like investment banks, hedge funds, futures and derivative markets, and private equity funds that were only lightly regulated? An infrequent period of financial turmoil may be the price that has to be paid for more rapid growth in income and low unemployment. Rapid income and employment growth might be worth an occasional period of turmoil especially if they do not lead to prolonged slowdowns in the real part of the economy. So far the effects on GDP and employment have not been severe, although the financial distress is not yet completely over.