The most popular error of our age is the belief that bureaucratic reforms will resolve deep moral and social problems.
If only we tweak the incentives, nudge the right people in the right direction, provide adequate supervision, we can set things right — or so some people think.
When it comes to the financial system at least, this is pure delusion. In the decades following the Great Depression, the policy responses to market upheaval — namely, more regulation — has been proven false. Yet each generation seems doomed to experience that for itself.
Neil Barofsky, the former watchdog of the Troubled Asset Relief Program, says as much himself (Read more: "If TARP is So Profitable, Why Not Bail Out Everyone?"). He let loose on the Obama administration's embrace of regulatory ideology in a column for Yahoo Wednesday. Barofsky wrote: