Subsidies and Regulation

The hot topic among economists right now (Tyler Cowen, Russ Roberts, Arnold Kling, Megan McArdle) is whether the Bear Stearns bailout was a good idea or not. Some people both believe it was a good idea and that we need more regulation of the financial markets.

Of course if we continue to bail out failing businesses, more regulation is necessary. Tyler Cowen says so, too.

As long as the Fed and Treasury are providing a safety net, insisting on capital requirements is entirely reasonable and it lowers moral hazard. If you're going to bail out your friend in a poker game, you can ask him not to bet too much beyond his chips.

I not only have great respect for Cowen's analytical ability, but it agrees with something I've been saying for years: Any time you want benefits from government, it is justified in regulating your actions, and it will regulate your actions. Or, in short, the more you ask for from government, the more freedom you have to surrender.