Does regulation make it worse?

What is the purpose of regulation? What are we really trying to achieve? What should the world look like after it has been regulated? Many “stakeholders” assent to the concept of regulation as a tool to fix a problem, but is there any clear idea about what the outcomes should be? It is very easy to become enmeshed in the mechanisms and processes of compliance without developing a grasp of the principles underlying regulation. This paper argues that regulation is based on ethical drivers that, if we understand them better, will help direct us towards a more effective and efficient system. Incoherent and excessive regulation can diminish individuals’ and firms’ ability to comprehend these principles and apply them in everyday judgments. A culture of dependency can result. Increased regulation of an undirected kind could indeed make matters worse.