Wednesday, June 22, 2005

Costs of Regulation

The U.S. Court of Appeals for the District of Columbia Circuit has decided that regulations that require independence for chairmen of mutual funds has to be sent back to the SEC. Why? Apparently, the SEC didn't even bother to consider the costs of the regulation! My guess is that this happens often. Maybe it's just me, but I rarely hear regulators talk about the costs of regulation. They only seem to mention the benefits. This is a huge mistake because if the costs exceed the benefits then obviously the regulations are doing more harm than good.

Link via Donald Luskin