Friday, 30 May 2008

A little more regulation, a little less action

Apparently part of the reason for the present financial mess is a lack of regulation, and we might need more of it in future. Who said this? Pascal Lamy, the director-general of WTO.

The boss of one of the world's most important economic organisations has said the lack of regulation in world markets was the root cause of the financial crisis which has hit world economic growth.

Pascal Lamy, the director-general of the World Trade Organisation (WTO), told the BBC that "a little more prudential regulation" could have helped prevent the banking crisis that has engulfed the US and Europe.

Mr Lamy said that the fundamental problem was that here was no international consensus on how to regulate the rapidly changing world financial markets or who should be the regulator.

The WTO boss also said that workers hurt by globalisation should receive more help from their governments.

Mr Lamy's remarks put him at odds with the so-called "Washington consensus" that liberalisation, privatisation, and open markets are the only way to bring about economic growth.


More evidence of a significant shift in thinking?

Thinking more broadly, doesn't it look increasingly odd that the governance of financial regulation contains no stakeholder representation? Given the damage that has been done, and the significant role of finance in society more generally, perhaps a push on this is in order, and winnable?

2 comments:

Nick Drew said...

at odds with the so-called "Washington consensus" that liberalisation, privatisation, and open markets are the only way to bring about economic growth

Don't buy the "at odds" statement. Open markets are indeed the best way to bring about growth, AND they need sound regulation, without which they gravitate towards oligopoly and worse

Probably not more regulation, just determined enforcement of the current regs

Tom P said...

I agree actually, the whole piece is a bit puffed up. If you watch the interview at no point does he say that a lack of regulation is 'the root cause' of the crisis. He just says he think that more regulation may have helped.