Quoting the Crisis23/09/2009
“ Regulation that exposes these costs and forces the trader or bank to absorb them makes the markets more true to capitalist ideals. Capitalist regulation forces the producers to recognize all of their costs. It undoes the harm to capitalism that comes from limited liability and its kissing cousins, the trader’s option and short term compensation deals. The flip side is that with capitalist regulation, no one can take on more risk than they are capable of absorbing. Which means requiring higher levels of capital on the one hand, restricting leverage on the other, which in turn means reduced capacity to generate high returns. The aspiring capitalists among us will decry such regulation because it invariably makes our lives harder; we can’t make as much money. But if the reason is that the regulation is now forcing us to bear all of the costs of our enterprise, then we are feeling the pain of having the socialist trappings removed, and entering into a more robust capitalist regime. „
Quote posted at 13:03
