Economics

Reason Writers Around Town: Nick Gillespie in Washington Post on Sarbanes-Oxley & "The Worst Ideas of The Decade"

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In a special Outlook section feature, The Washington Post surveys some of the "worst ideas of the decade." Reason's Nick Gillespie makes the case for Sarbanes-Oxley, the onerous accounting "reform" passed in the wake of Enron and other scandals, as a classic example of bipartisan lawmaking that fixes nothing yet imposes enormous costs.

The dumbest government policies are almost always the fruit of the bipartisanship that sets Beltway hearts beating with patriotic arrhythmia. Think the Patriot Act, No Child Left Behind, the authorization of force in Iraq and the TARP.

A particular offender is the Sarbanes-Oxley Act of 2002, which rewrote accounting and disclosure rules for publicly traded companies in the United States…the act should be remembered as a case study in hysterical legislating, which always produces more harm than good.

Read the whole thing here.

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  1. Worst idea of the decade = voting for Obama.

    Many reasonites are guilty of that.

    1. Voting for Bush would be 1a

      Both pretty indefensible positions

    2. Maybe second worst…

  2. I can’t believe the Medicare prescription drug bennie didn’t make the A-list. Fucking stupid that one was.

  3. Worst ideas of the century would be a little catchier, yes?

    1. That’s too depressing. If I have to think about how much more of the century there is yet to go, I just think about the potential for something an order of magnitude more awful. Thankfully, I will probably be safely dead before this century wraps up.

      1. Like Al Gore becoming president?

        1. Bush vs. Gore was like Bush vs. Dukakis, or more like a dog-shit sandwich vs. a cat-shit sandwich.

  4. If only this contemporary and fleeting Republican recalcitrance over health care “reform” might carry over into the inevitable, less newsworthy but mundane and predictable bludgeoning of the Constitution that is sure to follow.

  5. One of the silly things about the “who is more deserving of our support” battle last week between Jeff Flake and Ron Paul over earmarks is that the correct answer was always “both of them.”

    It should come as no surprise that of the three votes against SOX, two of them were Jeff Flake and Ron Paul. To try and whittle them down to one or the other over what is in reality an argument over practicality (Flake) and best practices theory (Paul) seemed really stupid to me.

  6. Hello.
    If you can’t get the grammar right in the first paragraph, how are you going to put together ideas about national policy?

  7. SO made a lot of accountants happy. Talk about boosting the need for even more accountants. Never mind the fact that almost the entire industry of accounting is a government created market.

    Only accountants and politicians could take a system used to close out commodity futures and other derivatives being trading and try and stretch it across an entire country and every industry. Fucking morons, and morons that can count.

  8. Actress Brittany Murphy dies of cardiac arrest at age of 32.

    1. That was a bad idea on her part, but maybe not one of the worst of the decade.

      1. For her it was!

        1. That’s a tough one to come back from.

        2. Are you sure? She did decide to appear in Just Married.

          1. That’s a shame. I really liked Murphy’s work, despite Just Married.

  9. Larger firms lobbied for passage of the act, figuring they could absorb the costs that would hobble smaller competitors

    The other day, some bozo on the teevee was claiming small business owners would come out okay, on net, under the new health care insurance “reform” laws.

    He must have “forgotten” about the all-too-real cash costs involved in actually interpreting and negotiating the small yet ferociously byzantine details of the scheme.

    It’s like telling me, “You can save a hundred bucks off your taxes, if you file for the ________ credit.” while neglecting to mention that the accountant is going to charge me three hundred buck to handle the paperwork.

      1. Attorney,Do you double-bill too?

  10. For a magazine called Reason

    1. Already drank, but thanks 😉

  11. Sarbox is one of the best examples of how it is impossible to have a rational conversation about very much in this country. After Eron, no one sat down and thought about the problem much less had a rational debate about what to do about it.

    Instead of rational debate, we have ad hominym attacks, panic and scap goating. SARBOX is just another example of this phenomenon. Sex offender lists are another. We take one side of an issue, totally demonize it, and completely overreact and end up doing more harm solving the problem than the problem itself was causing.

    1. I like the idea of being able to know if sex offenders are living nearby, but I *don’t* like how some people can be put on said lists for “crimes” like urinating in public.

      Child rapists? Hell, yeah, I wanna know if they’re living down the street. Who wouldn’t?

    2. John,

      Spell check

  12. I always believed the CEO was responsible for the accuracy of corporate financial reports.

    How silly of me.

  13. Remember PJ Rourke’s words: “the most feared words in the English language are ‘bipartisan agreement'”

    1. “Allow me to explain how our federal government works. To begin with, by the federal government I mean Democrats and Republicans working together. And the only thing dumber than a Democrat or a Republican is when those pricks work together.”

      – Lewis Black, “Black on Broadway”

      1. Or my favorite: “None of us is as dumb as all of us.”

  14. McCain/Feingold, definitely. Should be top of the list.

  15. I find it fascinating that Sarb-Ox was supposed to increase transparency and accountability in our financial system, yet was followed in fairly short order by the near-collapse of our financial system, which was polluted by unaccountable and non-transparent derivatives.

    Yet no one calls Sarb-Ox a failure (well, outside of the rarefied realm of libertarians).

  16. The following exchange on my facebook page, from a link I posted to this article, is worth reading because the second response is actually a quite convincing libertarian response to the first. Anonymized for the privacy of all involved. 🙂

    Mr. X
    Hrm, there is a lot of ideological whining in the article but no mention of its actual efficacy. I seriously doubt that the cost benefit ratio works out but it’s hard to know until one is done. As I’ve said before the belief that all regulation is bad is a non-starter for me. We should figure out what works and what doesn’t and get rid of what doesn’t. Sounds naive I know. Anyhow the chances of Congress actually following up to determine the effect seems unlikely given their short attention span (i.e. the next election).

    Mr. Y
    “All regulation is bad” is a strawman. The serious question is “who will regulate, and by what means?”.

    When the “who” is “the biggest bureaucracy in the world” and the “how” is “with their guns”, you can’t expect a nuanced or rational outcome.

    The people with actual skin in the game (the shareholders) should be the ones “regulating” accounting standards and transparency. It is the illusion of safety provided by the government regulators (and their favored cartel of rating agencies) that has discouraged shareholders from doing so.

    1. If I may summarize:

      Mr. Y: Good regulation isn’t impossible, only highly unlikely.

      Mr. X: In the real world, its impossible.

      1. Switch the X and Y in that.

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