Tim Lee falls into the libertarian twilight zone, when he starts commenting on the death of the newspapers and then inserts a sideways adjective re: regulatory agencies, calling them ‘cathedral-style:’
The Regulatory Cathedral and the Bazaar
Yochai Benkler ponders the death of the newspaper:
Critics of online media raise concerns about the ease with which gossip and unsubstantiated claims can be propagated on the Net. However, on the Net we have all learned to read with a grain of salt between our teeth, like Russians drinking tea through a sugar cube. The traditional media, to the contrary, commanded respect and imposed authority. It was precisely this respect and authority that made The New York Times’ reporting on weapons of mass destruction in Iraq so instrumental in legitimating the lies that the Bush administration used to lead this country to war.
This is a fantastic insight, and indeed, it’s precisely the insight that we libertarians apply to the regulatory state. That is, just as a decentralized media and a skeptical public is better than the cathedral style of news gathering, so too are decentralized certification schemes and a skeptical public better than a single, cathedral-style regulatory agency “guaranteeing” that businesses are serving consumers well. Most of the time the regulators will protect the public, just as most of the time newspapers get their stories right. The problem is that no institution is perfect, and the consequences of failure are much more serious if you’ve got a population that’s gotten used to blindly trusting the authority figure rather than exercising healthy skepticism. Regulatory agencies are single points of failure, and in a complex economy single points of failure are a recipe for disaster.
Tim wishes regulatory schemes were ‘cathedral-like,’ as that is his attempt to co-opt open source methodologies into his libertarian “government is bad” agenda. But it won’t wash because, in fact, most regulatory agencies are not cathedral-like at all. They arise because of the actions of the free press, discussing an issue of importance which then creates the impetus for legislation which is debated, modified, debated, modified again and again. That sounds pretty bazaar-like to me. Lots of communication, trial and error and networking with information kept in public view, not top-down, directed and secret at all. If it doesn’t work it gets changed. Rarely, good legislation gets thrown out, and not surprisingly, bad things happen. *
So I respond to Tim:
This is revisionism.
The reality is: for the better part of 65 years, the Glass-Steagall Act protected the banking system from the collapse we now see. The act was abandoned, and the unregulated baking systemically failed because of massive instability.
Furthermore, it is wrong to say that regulatory efforts are all Cathedral-like. They are not. Many are more bazaar like–arising after a specific failure, and becoming legislation only after a full and public debate.
My own experience is with building codes, seeing how any specific failure such as the Lakeview Elementary School Fire (see: http://en.wikipedia.org/wiki/Collinwood_School_Fire) or the Triangle Shirtwaist Factory Fire (see: http://en.wikipedia.org/wiki/Triangle_Shirtwais…) each lead–incrementally–to specific changes in building codes.
This is why I have such an issue with libertarianism–by denying the validity of the regulatory process you condemn countless millions to unnecessary suffering. Of course, that can only happen if: someone in power drinks that libertarian kool-aid, as happened when the Glass-Steagall Act was gutted. Fortunately, it will be at least 65 more years before anyone in power dreams of thinking like a libertarian again.**
There exists no libertarian answer as to how public safety could be provided, through a “decentralized certification scheme” equivalent to what is provided by modern building codes.
Of course, doubtless you can point to an example that proves that building codes are not presently perfect. That, however, does not detract from their demonstrated utility, any more than pointing out that many people die in Emergency Rooms would be an argument for their closure.
Banking and Finance admittedly are not my area of expertise, but even Clinton noted recently that he regretted loosening the Glass-Steagall restrictions, and now there are millions who will experience what deregulation has brought them: destitution and hopelessness.
*I will admit, though, that in a country that doesn’t have free speech and multi-party politics, a cathedral-like regulatory scheme could come into existence. That’s one of the reason communism failed–their regulatory schemes were cathedral-like. But, since the context is regulatory schemes in a multi-party democracy, I am talking about regulatory schemes only in that context here.
** ‘thinking’ being used very loosely.