Here is Ben Stein, writing in the July-August issue of the American Spectator, on "what we learned from The Great Recession":
we learned the limits of selfishness. Laissez-faire is great. Individual initiative and ambition are great. But there has to be some force controlling them and countervailing them. We have cut back so much on regulation and on private securities law enforcement that the financiers basically were on the playground without supervision—with nuclear weapons. Not good.
The idea that "we have cut back so much on regulation," and that is what led to the recession, just is not supported by the evidence. If the financiers were not being supervised, what were the 39,000 employees of financial regulatory agencies doing? What about the Securities and Exchange Commission with its $905 million annual budget, the Office of the Comptroller of the Currency with its $705 million annual budget, the Office of Thrift Supervision with its $283 million budget, and the Commodity Futures Trading Commission with its $116 million budget? That's not even mentioning the non-governmental Financial Industry Regulatory Authority, which spends another $800 million or so dollars a year on regulation and enforcement, or the numerous Senate and House committees that police the financial industry, or the 50 state attorneys general (remember what Eliot Spitzer was known for before the prostitution scandal?), or local and federal prosecutors, or the Federal Deposit Insurance Corporation, or the Securities Investor Protection Corporation, or the Federal Reserve Bank. What about the Sarbanes-Oxley law enacted in 2002 that imposed additional regulatory obligations on companies? And what about all the trial lawyers whose threats of class-action lawsuits on behalf of shareholders impose their own kind of burdensome supervision on public companies?
The SEC's budget actually more than doubled from 2000 to 2008, going to $905 million from $370 million. There's a case to be made that government regulators, by acting precipitously and arbitrarily in actions such as seizing Fannie Mae, actually created the financial crisis, or at least made it much worse.
The broader point is that when even the conservative, free-market-oriented American Spectator is printing these sorts of arguments, and when the chairman of the conservative, free-market-oriented Manhattan Institute is taking to the conservative, free-market-oriented editorial page of the Wall Street Journal to argue the "urgent need for a new global regulatory initiative" and say that "conservative opposition to any expanded role for government is a mistake," those who have a different view of the crisis and its solution and of the role of government in the economy have a lot of work to do. It's one thing when these arguments come from the Obama administration. But from the American Spectator?