More on the Madoff Case

The New York Times yesterday reported that stock-fraud prosecutions have gone down the last several years, implying that the Bush administration's lax attitude toward regulation of Wall Street let the Madoff scam go on for so long. Whether FBI and SEC fraud investigations are really down, I can't say, but let's accept that they are. This hardly makes the case for regulation. Why? Laws against fraud are not the same thing as regulation. Fraud is theft of property by deception. Thus a law against it is a law protecting property. In contrast, regulation is an imposition by government unrelated to any specific wrongdoing; it violates property. Repealing laws against fraud (or the refusal to investigate and prosecute it) is not deregulation. If it were, so would repeal of the law against armed robbery be deregulation. No one talks that way -- for a good reason. There is a big difference between regulation and prohibitions on depriving people of their property. Anti-market people like to conflate the two categories to score points for the regulatory state.

By the way, if the government were to vigorously investigate fraud, it might indict everyone who keeps Social Security going.

Cross-posted at Anything Peaceful.