Watchin' the Detectives...

This American Life. The NPR show that I both love and have to admit is occasionally little more than  "Poor People Say the Darnedest Things." Sorry, Ira.

What makes This American Life worth listening to? Excellent reporting, excellent production, but above all a sense of story.   They have a beautiful ability to turn the mundane into epic storytelling , and they've begun to focus that light on the economy.

This week, the show was on regulation,  the watchmen who look over the banks and insurers. Who watches the watchmen? No one did -- or rather, a lot of people do, but not very well. 

1. So many agencies were regulating such tiny parts of AIG, that most of the time no-one was regulating them. Everyone had a tiny piece; no one was looking at the big picture. It's the classic awareness problem:

2. The agency that did have ultimate oversight by AIG was:
   (a) Tiny and unknown, with no political power to stand up to a massive organization like AIG
   (b) Chosen by, and paid by, AIG. Yep, banks get to choose who regulates them, and they pay the agency salaries.
   (c) Useless.

Which brings up a problem.  If too many agencies are useless, is the answer to create one, federal super-agency  ? It's the Homeland Security problem (a solution, by the way, proposed by Clinton and then shelved by Bushie when they also stopped watching al-Qaeda, but that's another post and I'm just obviously engaging in bear-bating here...). Anyway, the Homeland Security problem:

Do competing watchmen do a better job because they are bringing in different vantage points? Or do they do a worse job, like outfielders certain that the other guy is responsible for catching that pop fly?

So who watches the watchmen? Well, besides the graphic novel fanboys, I mean. But who custodiet the custodes? Perhaps, um, Congress, given that they established the agencies in the first place? That's what a democracy is for. But congress does do that, by establishing those agencies, and then holding toothless, partisan hearings after the money is gone.

Plato, in his Republic, had a very fine and naive answer: The watchmen watch themselves, because we beguile them with a noble lie:

The noble lie will inform them that they are better than those they serve and it is, therefore, their responsibility to guard and protect those lesser than themselves. We will instill in them a distaste for power or privilege, they will rule because they believe it right, not because they desire it

Not sure I buy it; we've seen plenty of dictatorships built upon such foundations.

 At the same time, we certainly have not instilled in Wall Street, Congress, or our schools "a distaste for power and privilege." We have sown greed and avarice and hyperindividualism all indistinguishable from dissocial personality disorder. The question is no longer what harvest will we reap. The question becomes, what seeds will we sow for the future?