From the Financial Times's front-page article on the bank capital requirements known as Basel III:
"The Basel committee is trying to give a lot of freedom to individual countries," said one senior Spanish banker. "But then, you just have a mess, and no level playing field."
This is incredibly important for understanding the way in which the financial regulation drive is in significant ways an assault on the whole concept of national sovereignty. And since some of the countries participating -- the G20, for example, includes both China and Saudi Arabia -- aren't even free or democratic, it undercuts the whole concept of self-governance.
That may sound like alarmist exaggeration. But it's not all based on an anonymous quote from a Spanish banker. American officials say these things, too, even quoted by name. Here is Senator Dodd, the top Senate Democrat, after reaching agreement with the House on a bill rewriting American financial regulations, as quoted by Mike Allen's Politico playbook:
"The harmonization of our rules, particularly with those in the European community, Pacific Rim, I think will be awfully important. And the United States, having completed this work -- we hope in the next week -- can offer some leadership to the world …"
They make it sound so pleasant: "harmonization," avoiding a "mess," creating a "level playing field." But what they are really trying to do is prevent countries from competing for capital. They say they are trying to prevent a "race to the bottom," in which countries compete with lax rules that create the potential for a global economic crisis. But the effect is also to prevent a "race to the top," in which certain countries, because of their freedom, attract capital. The threat of a "mess" also ignores the possibility of spontaneous order. Not everything that isn't highly regulated by the government turns into a "mess." And sometimes things that are highly regulated by the government (or that the government is under the illusion that it is highly regulating) turns into a mess.
