More Failure of Imagination

A propos of yesterday’s post, I came across a blog post the other day about the Madoff scandal which I found quite interesting. Madoff, as anyone not living under a rock for the last few months knows, was the famed investor whose ponzi scheme milked America’s rich and famous out of nearly fifty billion dollars. The fact that this scheme went undetected for so long (despite the efforts of some to sound the alarm) and was only uncovered when his own sons turned him in, is, to put it mildly, a rather bad screw up for the S.E.C. In fact, as Robert Murphy notes, if you had asked people beforehand to come up with a situation where the S.E.C. screwed up so badly that it would be abolished, they probably would not have come up with something nearly as bad as the Madoff scandal. And yet, the response to these failures at the S.E.C. will undoubtedly be for it to be given more money, more power, and an even greater mandate to root out scams in the investment world.

No doubt for some the problem here is not so much a failure of government as a failure of Republican administrations. If the S.E.C. wasn’t doing its job, it must be because Bush gutted the agency, or filled it with ideological hacks who refused to enforce the law.