By Patrick Morris
Occupy Wall Street’s protesters are calling for more regulation of banks, derivatives and executive compensation to make the system more equitable; in other words, they are calling for Wall Street to clean up its mess.
Wall Street has responded by saying that regulation is an impediment to profitability and prevents job creation. So who is right?
Actually, it is not easy to say that deregulation creates a better business environment, nor is it possible to defend regulation as a quick-and-easy fix to corruption or economic displacement. The wide range between no regulation and hyperregulation ultimately leads to a functional regulatory equilibrium—or regulibrium.
The tragic history of regulation is written in blood and suffering. The Great Baltimore Fire of 1904 changed building codes, the sinking of the Titanic changed maritime safety codes, and the Triangle Shirtwaist Factory fire changed fire codes. Both the owners of...