Second Best
When I wrote the words 'second best' in an earlier post about Andy Murray - a strange memory flashed through my head - of the days when I studied economics.
The thought that came back to me was about the theory of 'second best' - which effectively says that the hidden hand of market is always right.
So according to the proponents of the theory of second best - it's pointless and futile trying to out-guess or second-guess what the market should do - in any given situation.
Because human beings - in the form of politicians or a government - will always bring about a worse outcome than the market would achieve - if left to its own devices.
So the theory of second best was a favourite with the free marketeers - who thought it was the bees knees - the perfect answer to advocates of government intervention.
Yet the interventionists argued that many many markets - even good markets - still required effective regulation, the real problem being how much and by whom?
Now I never believed in second best all those years ago - and there's even less reason to do so now.
Not least because of the mess that unregulated markets - or at least not properly regulated markets - made of many western economies - including our own in the UK.
Sure some of our politicians had a big role to play in the disaster - not everything can be blamed on the bankers - despite their role as handy whipping dogs these days.
And the obvious sign of that is that not all countries were affected by the crash equally - or in the same way.
But I can't really believe that anyone seriously now believes that things would have turned out a while lot better - if the financial markets had been allowed completely free rein in 2007/08.
I think not - much more likely that the current mess would be on an even bigger scale.
So the question now is how much to regulate and how best to regulate - how much competition is good and who - above all else - should guard the guards?
Because I think it's fair to say that this time around - the guards in the UK were all asleep at the wheel - i.e. the government, the Bank of England and the Financial Services Authority - to name just three of the key players.
After bringing the banks back under proper control - my three recommendations for other areas of life that could do with much more effective regulation are:
1 The Press and Media
2 Factors and Property Managers - a personal hobby horse
3 Extending FOI to cover all organisations using public funds
4 Trade unions - ever bigger these days, but less ever responsive and representative
