Mind your own business

Internationalizing regulation should not be done in the name of cooperation.

Since the conclusion of the G20 summit in London last week, the principal message sent out from the meeting seemed to be one promoting international regulation. A copy of the draft communiqué from the G20 summit obtained by Reuters describes an effort to use the International Monetary Fund in sniffing out âÄúmacroeconomic and financial risks,âÄù extend regulation to major institutions, implement compensation rules on âÄúsignificantâÄù financial institutions and give developing economies a bigger role in setting policies in international finance. ItâÄôs unfortunate that these measures are so popular because they are very dangerous. In last MondayâÄôs editorial, âÄúThe Dollar vs. the world,âÄù the Editorial Board took the stance that surrendering control of monetary policy to an international body is nothing less than the surrender of AmericansâÄô rights, and this proposal is problematic for the same reason. Presumably, the standards set in place by any international regulatory agreement would come with the assumption that âÄúone size fits all.âÄù But one size cannot (and never does) fit all; rules governing finance markets in countries like Kenya, Chile or Thailand would be inappropriate to apply to major hubs like the United States, the United Kingdom and China, and vice versa. And if it were necessary to tailor specific regulations on a country-by-country basis, it would be unjust to leave those decisions to a collective of bankers and politicians who may not have a countryâÄôs best interests at heart. But that doesnâÄôt mean that everyone ought to go it alone. Prior to the G20 summit, President Barack Obama struck a tone of cooperation, saying, âÄúWe can only meet this challenge together.âÄù By all means, the world ought to cooperate and lift all nations out of the current economic quagmire while keeping hungry multinational corporations on a short leash, but that cannot be accomplished through internationalizing the control of business.