Hey Robert.
I have been enjoying your endless search of knowledge, but from my view, you seem to be only learning about how to pontificate on high but not really learning anything in the mean time.

I have hesitated to respond to any of your posts since you have always had a pattern of pontificating but not participating in any actual discussions-especially if someone hold different views than you. You start out with:

People learn from mistakes, institutions don't. Institutions "learn" by having rules and regulations created which incorporate the lessons from the past. This is the institutional memory. Those who are in favor of fewer regulations are not doing future generations any favors.

Actually that sounds a little backward looking and thus not very efficient. I also think that you have fallen into a the BO trap of thinking that regulations can only be defined as more or less. Even you would not necessarily agree with 100% regulation that entails a Socialist State. Also you seem to forget that even the lessons from the past may no longer be valid since the market and society has changed. Regulations need to be changing to adapt to the changing environment.

If moral hazard is to mean anything then the separation between those taking the risks and those getting the rewards has to be removed. In addition law breaking has to be punished at the personal, not institutional level. Firms don't break laws, people do.

So I wonder why you have a problem when in avoiding moral hazards the person taking the risks needs to face the consequences to the degree they deserve.

But I wonder if you really can square these statements with the ones above. "Law breaking has to be punished at the personal level" because "people learn from mistakes" but then why is regulations directed at institutions when "Firms don't break laws" and should not be punished for breaking laws?
From my experience, institutions learn and adapt to regulations that in essence makes them obsolete or inappropriate for the present environment. So those that scream all day about MORE regulations are self delusional and ultimately the creators of self-defeating rules and regulations.

Rutherfordian ------------------------------ RDRutherford