The conflict of interest comment was mostly directed at those that feel that somehow we can regulate away conflicts between auditors and the companies they audit. The idea that tax revenues cause the SEC a conflict is faintly ridiculous. But just banning consulting by auditing firms won’t fix anything. As long as the customer foots the auditing bill, the auditor will say what they want to hear, or be replaced by a company with less integrity.

I’m not at all knowledgable in this area (and should probably just go back to polling for hits), but aren’t the current laws against fraud enough to toss Ebbers in jail for many years and fine him into penury? If so, that needs to be done. And not Milken style. One year and half of his money ain’t gonna cut it.

Is that admitting that market forces aren’t always the best deterrent to bad behavior? I think it is!

This post reveals the inherent absurdity of libertarianism. Just like economics or physics, the concepts of libertarianism work wonderfully in the lab–people act through self-interest, the market rewards good ideas, the ball accelerates at a constant rate when it’s dropped–but all these things aren’t clean in real life. Markets fails due to lack of information, long-run consequences are ignored because of human psycological weaknesses (see: failure to save for retirement), and the chaos inherent in nature means that we can’t project the flight of a ball.

Libertarians need to admit that market forces aren’t always the most efficient deterrent to bad behavior. In markets where cronyism, cartels, or monopolies are most likely to develop or have taken root, regulation is the only method of assuring transparency and fair play. I’m not advocating a suffocating bureaucracy, but a reliable actor who polices behavior that steps outside boundaries. It’s a miniscule price to pay for the financial reliability upon which a healthy market economy relies.

Or we could turn over the economy to home-grown chaebol and keiretsu. Your choice.