Sunday Thought - Regulatory Capture

I am really surprised, how hastily regulatory bodies push the centralization. Researchers in politics and economics say: It's normal.

It's innovation? But, innovation needs decelerators. 

It may be innovative, but innovation needs decelerators. Acceleration is great for many systems, but if you are in a fog of possibilities, you need to the think a little more. Insight comes from inquiry and radical experimentation.

It's Sunday, so I think of cooking. There is fast cooking - ingredients cooked in the flame - and slow cooking - cook in a way allowing flavors to mix in complex ways. Great chefs are good at slow cooking. They test creative new dishes thoroughly. And they promote the results to get eaters hooked to their innovations and get them time to adapt...

Why all the haste? It's a dramatic regime switch - why not implementing a test phase?

Regulators get inevitably captured?

Is it the problem? The fear of being blamed for another great recession?

Some say, it's normal for regulators to get captured…it's a natural logic...
Acadamics call it "regulatory capture", the process by which regulators who are out in place to tame the wild beasts of business instead become tools of the corporations they should regulate, especially large incubents.
Models and reasons are reviewed here. A few selected: regulators need information from the regulated, consequently interaction, cooperation…but there is also lobbying and there are career issues...

Only a scene in a big picture?

Big Business Capture Economists?

Beyond regulation…what if big business has also managed to bend the thinking of economists? An idea they are is published in the Mark Buchanan's article has big business captured the economists?
Are they [economists] free authors of their ideas to are the, like regulators, significantly influenced in their thinking by their interaction with business interests?
There is empirical evidence that this happens…

Beware strict centralization?

I've only poor knowledge in social and  economic sciences, but I understand: capture is not a risk, but a danger (it can't be optimized).

And my system view tells me: centralization feeds accumulation that feeds capture.

This was one of the reasons, why I posted don't ride the waves of centralization blind.

I know that the bigger mistakes are often fixed later and the only thing we can do is helping the small and medium sized financial market participants to not only meet the regulatory requirements, but stabilize the core of their competition with the big player who were selected to "save" it.