Updated: Jun 20, 2022
As Nassim Nicholas Taleb wrote in his book, Antifragile, many things in life benefit from stress. The opposite is often true: take away the stress, and things get weaker.
Governments have proven to be pretty bad at telling the difference.
Sometimes the regulations designed to protect our financial or healthcare systems actually make them weaker.
With all the recent volatility in our world, quite a few politicians are suggesting that regulations can save the day. They seldom do. In many cases, the marketplace is much faster and better at spotting weaknesses and fixing them.
Before you rush to support what sounds like a good idea (i.e. “Investors lost money. Let’s increase regulations.”), ask yourself whether the proposed change is really going to protect markets over the long run or instead weaken them.