How should government regulators strike a balance?

This is a discussion! Please do not leave rude comments. Thank you!

How should government regulators strike a balance between the costs of regulations and the benefits of regulation?

They should not. Regulations do not help one iota. The marketplace should be the only "regulator" out there and the government should not interfere with the marketplace at all, otherwise you get distortions and artificial imbalances. That is probably the cause of all the financial mess that we have today.

Take for example 2 industries in the United States, one with GOVERNMENT regulation and one with MARKETPLACE regulation. Take the FDA (Food and Drug Admin) as a government body to regulate drugs and other consumables. It cost taxpayers $662 million annually to run the bureaucracy and it still falls short. Moreover, it entices big shots in the FDA to be corrupt as they hold immense power to decide which companies gets approval and which companies don't. Drug companies on the other hand have to hire not only people to develop effective drugs, but also people to handle the bureaucracy within the FDA. It is not inconceivable that these people will be more highly paid than the people who make or market the drugs. Therefore, it cost not only the taxpayers so much money, but it cost the drug companies so much more such that the cost of drugs goes up.

Compare this to another industry, the computer security industry. There are nowadays, tons of malicious things going on in the world of computers. From early computer viruses to internet worms, hacks and exploits, companies can literally go under overnight if their entire IT infrastructure were compromised. However, there is no government regulation on how each company should operate where computer security is concerned. The marketplace is full of solutions with regards to computer security, it doesn't cost the tax payer anything and companies decides how much security they need.

Most regulators are not given much choice. Congress sets the rules and most implementation policies must be approved. Any time regulators differ from Congresses intent Congress can simply clarify the rules.

When it comes to Congress considering the cost benefit ratio of regulations, I see no evaluation, only what is best for the political party that has the votes. That is why we will see massive changes in regulations of all government branches after Obama becomes President.