SIMPLIFYING LEGISLATION.

SIMPLIFYING LEGISLATION. Gillian Tett had an essay in the Financial Times on April 30 arguing against the 1300 page financial reform bill, which has over 300 pages dealing with derivatives. She made two arguments. First, the complexity means that “it is going to take most investors and bankers a very long time to work out exactly what has been turned into law.” The second argument was that “it will end up playing into the hands of the banks” because they have the resources to find and exploit loopholes in any bill that is passed. I would add a third argument, which applies to bills before they have become law. The more issues are addressed by proposed legislation, the more opportunities for banks and lobbyists to insert loopholes because there are more opportunities to make trade offs. And, of course, legislators and the public would have a better chance to think about and understand a series of short bills. (The health care bill provisions were interrelated because of Congressional fiscal rules. Although growing out of a common crisis, it seems to me that the financial reform issues can be considered separately.) Forty or so years ago, when I was in graduate school, we thought that “log-rolling” and complexity were useful in getting legislation passed. I’ve changed my mind.