Unfortunately, I think it’s gotten a little buried (along with Vernon Smith’s excellent lecture) on social media and in the blogosphere, due to articles, posts and comments, replying to a certain exchange at the same event, with which a certain circle will already be familiar (see here, here, here, etc.).
So I wanted to pull this story out and give it its due as a short, impactful, illustration of not only important economic principles but of how these principles are sometimes applied in the too often echo-chamber of research/policy economics. I think here he drives directly to the heart of some presumptions that underlie those that think regulatory failure should just be met with shiny, fancy, NEW regulations.
Pete Boettke, responding to whether new/more/better housing regulations would stop a future housing bubble, started with this story:
Many years ago I was actually at a conference with Pete Leeson, and Ann Krueger said, ‘Look, look, we all love the market. What we need is reasonable regulation that’s not capturable by interests.’
And I raised my hand and I said, ‘What if that’s a null set*?’
And then Andre Shleifer… he chuckled and said, ‘Why are you so unreasonable?’ But the question never got answered.