From a government’s perch, the reality is confusing. Institutions are taxpayers themselves and hence stakeholders. They are also income sources and service providers for citizens. A large number of institutions are foreign exchange earners for their country. Governments view certain sectors as drivers of competitive advantage. US views finance and money management as its competitive advantage. A government might opine that a running system is easier to coax into order than let the system falter. Yet whatever the reason, they must be elaborated and opened to public scrutiny.
There are of course many lessons from the current crisis. Arnold Kling has thrown in his perspective here. However, that is when the sun breaks out. Right now, from within the eye of the storm, things are more difficult and often survival or preservation always gains top priority. We tend to salvage whatever we can even disregarding our lives. The roar of the catastrophy drowns the calls of prudence. I believe something similar is happening with governments globally. In their rush to do something – they may not necessarily do the right thing.
A comprehensive regulatory overhaul is definitely a take-away from this crisis. I believe, it is also important to take this regulation global. Further, taxation and social security needs to be overhauled. At the farthest “public goods” need to be defined and reworked. The most essential takeaway will be a disaster control program that tests scenarios and develops action plans to emergency alleviation. The system of academics, consultants and media (what we have currently) does not create enough accountability to identify scenarios and develop action plan. No doubt the system currently does that. But it is not treated seriously enough to become a disaster management system. Else the forecasts of lot of bloggers (including high profile ones like Dr. Roubini) would have triggered an enquiry.