This Friday, November 14, I shall be participating in a public forum at the Theresa Lang Student Center, New School University, 55 West 13th Street, Room 1202, 1203, that has been organized by James K. Galbraith, a senior Obama economics adviser, under the sponsorship of the Economists for Peace and Security, and entitled, "Financial Crisis, the US Economy, and International Security in the New Administration." Besides Galbraith and myself, a few of the other participants will include Joseph Stiglitz, Lord John Eatwell, Allen Sinai, Paul Davidson, Perry Mehrling, Ping Chen, and Dimitri Papadimitriou, among others. I will be on a panel devoted to proposing new regulations for the domestic financial system. I shall discuss what I intend to talk about in four postings here, this the first one.
So, my first remark will be to urge that there be no new regulatory bodies or other bureaucracies created. What is needed are better rules and better people in the relevant positions. There may be (and already have been) changes in the powers of particular bodies, but any effort to create some new, grand oversight body will be just a waste of time and effort. Unfortunately, Democrats sometimes like to d0 this. So, in the wake of 9/11 they were stronger advocates than most Republicans of creating the Department of Homeland Security to combat terrorism. This was supposed to centralize and simplify decisionmaking, but it simply made things more confused and worse. Burying FEMA in this body did not help with its ability to fight against hurricane disasters and damages. I see no reason for Obama to revive Clinton's National Economic Council either. What did it ever do that the CEA cannot do? And for that matter, do we really need the Comptroller of the Currency? Cannot its functions be taken over by the Fed? In this time in which government will necessarily be increasing its role in the economy, let us at least hold back on increasing its overblown bureaucracy. Keep it lean and clean and mean.