How good regulation makes business better
Terrific observation, in the context of Elizabeth Warren and the CFPB, from James Surowiecki in this week’s New Yorker:
But, over the past century or so, new regulatory initiatives have inevitably been greeted with predictions of doom from the very businesses they eventually helped. Meatpackers hated the Meat Inspection Act of 1906, but it rescued the industry from the aftereffects of the publication of “The Jungle.” Wall Street said that the creation of the S.E.C. would demolish stock trading, but the commission helped make the U.S. the world’s most liquid and trusted stock market. And bankers thought that the F.D.I.C. would sabotage their industry, but it transformed it by effectively ending bank runs. History suggests that business doesn’t always know what’s good for it. And, at a time when Americans profoundly distrust the financial industry, a Warren-led C.F.P.B. could turn out to be the friend that the banks never knew they needed.
I bolded the key line above. Yes, businesses are often driven by smart, innovative, industrious people who create value by their wit and work. But, more often than not, successful business people underestimate the role of luck, of being in the right place at the right time on their success.
