THERE is something about onions that brings out the worst in bureaucrats. Orlando
The temptation for bureaucrats to imagine they have special knowledge, that they can intervene and make things better, is irresistible. The EU is getting in on the act. A revised Markets in Financial Instruments Directive provides for regulators to impose limits on the size of the bets which dealers in commodity futures can place. Time will tell how successful this will be, but recent academic work suggests that interventions like this or the Tobin tax may increase price volatility, not reduce it. The
We might think of the bureaucrats at the
This conviction is often the root of the problem. A narrative emerges within a bureaucracy that there is a correct line, one best way of doing things.
It is when a dominant narrative emerges, when dissent is not tolerated, that the chances of making bad decisions rise sharply. Recent developments in algorithmic text analysis enable such situations to be detected from internal memos and emails. The first task of a regulator should be to monitor itself against this danger.
Most Popular Stories
- Chobani Counters Competition With Expanded Lineup
- What to Expect From an Amazon Smartphone
- Clinton Sought GOP Support for Health Plan
- Auto Parts Plant Opening in Pa., Jobs on Tap
- Earnings Season Starts Rough for Health Insurers
- Saucedo Mercer Running on Empty in Arizona
- Spring Salmon Return to San Joaquin
- IPO Market Shows Signs of Settling Down to Earth
- Pakistan Library Dedicated to 'Osama bin Laden, the Martyr'
- Venture Investments in U.S. Highest Since 2001