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Financial Regulation in the United States: Lessons from History

Authors

  • Paul Peretz,

    Corresponding author
    1. California State University
      Paul Peretz is a professor in the Division of Politics, Administration and Justice at California State University, Fullerton, and coordinator for the public administration program. He is the author of The Political Economy of Inflation in the United States, The Politics of American Economic Policy Making, and numerous articles primarily on economic policy making. He holds a doctorate from the University of Chicago and has taught at the University of Washington, Brown University, Cornell University, and Columbia University.
      E-mail:pperetz@exchange.fullerton.edu
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  • Jean Reith Schroedel

    Corresponding author
    1. Claremont Graduate University
      Jean Reith Schroedel is a professor in the Department of Politics and Policy and Applied Women's Studies Program in the School of Politics and Economics at Claremont Graduate University. She is the author of Congress, the President, and Policymaking: A Historical Analysis (M. E. Sharpe, 1994) and Is the Fetus a Person? A Comparison of Policies Across the Fifty States (Cornell University Press, 2000); the latter was awarded the American Political Science Association's 2001 Victoria Schuck Award. She is currently editing a two-volume study for the Russell Sage Foundation on the impact of Christianity on democracy in the United States.
      E-mail:jean.schroedel@cgu.edu
    Search for more papers by this author

Paul Peretz is a professor in the Division of Politics, Administration and Justice at California State University, Fullerton, and coordinator for the public administration program. He is the author of The Political Economy of Inflation in the United States, The Politics of American Economic Policy Making, and numerous articles primarily on economic policy making. He holds a doctorate from the University of Chicago and has taught at the University of Washington, Brown University, Cornell University, and Columbia University.
E-mail:pperetz@exchange.fullerton.edu

Jean Reith Schroedel is a professor in the Department of Politics and Policy and Applied Women's Studies Program in the School of Politics and Economics at Claremont Graduate University. She is the author of Congress, the President, and Policymaking: A Historical Analysis (M. E. Sharpe, 1994) and Is the Fetus a Person? A Comparison of Policies Across the Fifty States (Cornell University Press, 2000); the latter was awarded the American Political Science Association's 2001 Victoria Schuck Award. She is currently editing a two-volume study for the Russell Sage Foundation on the impact of Christianity on democracy in the United States.
E-mail:jean.schroedel@cgu.edu

Abstract

History is institutional memory writ large. One looks at economic history to see what problems recur, what causes them to recur, what solutions have worked best in the past, and which interventions have made the problems worse. The authors argue that a moderately complex interaction between the workings of the financial sector, the way in which the political system is organized, and the administration of regulation makes perfect regulation of the financial sector extremely unlikely. Many of these problems arise as a result of conflicting incentives for those participating in and regulating the financial field. The authors find that some proposed solutions have improved matters but have costs, and that some proposed solutions have actually worsened problems in the financial sector.

Peoples and governments never have learned anything from history, or acted on principles deduced from it.

Georg Wilhelm Friedrich Hegel, 1837

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