The Iron Law of Responsibility

Self-Regulation Puzzle piece

In the social sciences, there aren’t too many “lawlike” patterns.  However, the iron law of responsibility is an exception and speaks to many governance problems in today’s society.  The essence of the law is as follows: “Those who fail to regulate themselves will be regulated by others.”

The mega-banks in the United States (e.g., J.P. Morgan,  Citibank, Bank of America, Goldman Sachs) are currently too big to fail, yet they continue to fail to regulate themselves.  Because these banks can bring down the entire financial system through lack of proper self regulation, our society must rein in these financial behemoths.  Congress has just proposed a new set of regulations to separate out the most risky parts of these banks from the relatively riskless parts.  And the relatively-disorganized Occupy movement  is united in its desire to better regulate these mega banks.

No one, particularly Americans, likes to be regulated by others.  However, there are two potential reactions to being regulated: (1) fight the regulations, or (2) regulate yourself so that society’s interests come first.  We have seen what course of action the systemically important banks have repeatedly taken.  I remain hopeful that society will keep pushing them to behave in the interests of society.

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