#Econsky 📉📈 I'm looking for examples of *obvious* under-regulation of markets -- cases that even the Friedmanites of the world would agree with. Ideally very specific (e.g., not "antitrust", but "the rise of Standard Oil"; not "banking reg" but "2008 Mortage Crisis"). It's for a book project. - ThreadSky

rfisman.bsky.social • 16 days ago

#Econsky 📉📈 I'm looking for examples of *obvious* under-regulation of markets -- cases that even the Friedmanites of the world would agree with. Ideally very specific (e.g., not "antitrust", but "the rise of Standard Oil"; not "banking reg" but "2008 Mortage Crisis"). It's for a book project.

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amsha.bsky.social•16 days ago

The opioid prescription boom is a big one but it's pretty well covered. The under-regulation of social media misinformation starting in the 2010s is another.

rfisman.bsky.social•16 days ago

I agree. But remember the rule: Milton Friedman has to agree. That's what makes it harder...

nocturnation.bsky.social•16 days ago

Love Canal

lswinkels.bsky.social•16 days ago

Initial Coin Offering -- https://www.investopedia.com/terms/i/initial-coin-offering-ico.asp

gabzaffari.bsky.social•16 days ago

Most of cryptocurrency markets.

gr8statsbatman.bsky.social•14 days ago

Duration mismatch in the S&Ls in the 1980s.

ioramashvili.bsky.social•16 days ago

Not sure this fits the bill but UK building safety regulations and the Grenfell disaster come to mind (leaving builders to self-certify that a building is fireproof was not a smart move after all 🤷‍♀️)

brooklynxman.bsky.social•16 days ago

If we're talking about self-certification...Boeing's relationship with the FAA.

rfisman.bsky.social•16 days ago

I mean, the issue though is people will see both sides of that tradeoff. I agree, but others might say that cost savings and reduced red tape made it the appropriate call?

ioramashvili.bsky.social•16 days ago

To stick with your focus on markets, it’s imposing very high transaction costs on buyers and mortgage providers to check a building is safe - rather than govt certifying safety this needs to happen with each new transaction.

ioramashvili.bsky.social•16 days ago

And many buildings are now not mortgageable because safety can’t be assured so govt certification would have a market-making function there. Similar to your subprime mortgage example people thought less regulation meant less red tape but then that section of the market imploded.

brooklynxman.bsky.social•16 days ago

Supplement industry, if it isn't a drug regulated by the FDA the label is effectively meaningless to the actual quantity of supplement in the bottle, while some of these have real effects and are even regulated as prescription drugs in other countries (for instance, melatonin).

ahornstein.bsky.social•16 days ago

Allergens must be disclosed in foods but not in alcohol or medication. And so people who are allergic to a food must contact each manufacturer separately to find out if an alcohol or drug contains the problematic ingredient

jessexjesse.bsky.social•16 days ago

I mean, the original “blue sky” laws for securities post 1929 crash would be a classic one. can’t sell a financial contract that’s just an empty promise / bullshit.

didionecon.bsky.social•16 days ago

Just financial markets, or can this include food, drugs and environment?

rfisman.bsky.social•16 days ago

Have to add this one that I got via email that *literally* had Milton Friedman agreeing (citation at the bottom):

zoeconomy.bsky.social•16 days ago

Lack of regulation in farming that led to Dust Bowl and ensuing creation of Soil Conservation Service (precursor to NRCS)

thefinanceleftist.bsky.social•16 days ago

1) The Entire US Healthcare System
2) The Entire US Housing Market
3) The Entire Social Media Market

rfisman.bsky.social•16 days ago

I think you forgot the specific part!

thefinanceleftist.bsky.social•16 days ago

LOL I know but there is so many pieces of each of those you could use. Healthcare for instance. :
1) Government subsidized drug development that has no follow up parameters for prices charged for that drug when being delivered to the American people.

thefinanceleftist.bsky.social•16 days ago

2) Tier 1 (general and cheap to produce) drug costs allowed to be hiked through the roof because they are changing extremely small variations of the drug that don't change the impact on the user. Insulin for instance.

mxmak.bsky.social•16 days ago

Just a silly little fun fact is that there aren't technically generics, but biosimilars for insulins made by different companies serving the same purpose. There are "authorized generics" through the same insulin manufacturers that jacked up the prices to begin with bc they are identical to brand/OG.

mxmak.bsky.social•16 days ago

I say this because insulin is always the exception to the rule. This right here is a big reason people like Marc Cuban have not offered "generic" [re: biosimilar] insulin because for insulin, it isn't the same process as a true generic in the way other medications are thought to be.

thefinanceleftist.bsky.social•16 days ago

3) The negotiability of prescriptions for programs like Medicare and Medicaid.

thefinanceleftist.bsky.social•16 days ago

There's so much more, just the tip of the iceberg.

afinetheorem.bsky.social•16 days ago

Traffic congestion is a fairly obvious one. Particulate air pollution is another.

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