Who do you want to win the 2012 U.S. Presidential election?

First and foremost, government regulators are no Gods, nor angels, but human beings every bit as susceptible to making mistakes and even being corrupted as are all those folks who work in the market place. The question, “And who will regulate the regulators?” hasn’t ever been answered satisfactorily because no one will. It is an irreparable situation–something for which Professor James Buchanan received the Nobel Prize when he and Gordon Tullock identified the problems with public choice. The gist of this theory is that all persons, in or outside government, tend to promote their own agendas. I would add that this is especially the case in government where accountability and budgetary constraints are minimal and where the very loose, vague idea of the public interest is impossible to follow as a guide to forging policy.
There is also a serious problem with government regulation that is rarely mentioned, namely, that it involves something inimical to the free society, namely, prior restraint. In the criminal law it is well recognized that no one may be incarcerated or otherwise punished unless he or she has been convicted of a crime. But government regulations impose burdens on millions in the market place who haven’t been convicted of any crimes! This is unjust. Not that matters of injustice figure heavily in contemporary political thinking which is now proudly pragmatic, unprincipled, and thus allows for arbitrariness.

Government regulation is very, very costly and removes resources from the market place that could generate economic growth, employment, and deposits that could be used to provide loans for starting business enterprises. I am not here in the position to recount the enormous cost of government economic regulations but there are many works that demonstrate it clearly and convincingly, including such popular fares as John Stossel’s early special on ABC-TV, “Are We Scaring Ourselves to Death?” Stossel showed, with concrete numbers, that the cost of government economic regulation actually results in extensive poverty, something that is the major cause of misery in a society.

Arguments for government regulation are plenty but they aren’t good ones. One is based on the phenomenon of market failures (the cause you cite, David, as a reason for a “greater regulatory role”) but omits the fact that there is a far greater hazard from political failures when governments regulate the market. Another is based on the myth of positive human rights, duties everyone owes to others to take care of them, a position that encourages impermissible involuntary servitude in society.
The only slightly credible support for government regulation, identified in an article by Kenneth J. Arrow, another Nobel Laureate in Harper’s Magazine back in 1984, comes from what Arrow called judicial inefficiencies associated with air pollution and other negative externalities or harmful side effects of economic activities such as manufacturing. But even this is unnecessary when one considers that such bad side effect could be dealt with through public health laws that prohibit defiling the air mass and other public realms.