"Anarchy plus a constable" was Thomas Carlyle's description of classical liberalism. Gerald O'Driscoll, in an "An Economy of Liars" in the Wall Street Journal, discussed the breakdown of honesty and ethics and related it to the current financial crisis.

One of O'Driscoll's points dealt with laws versus ethics. Others have pointed out that the more laws a society has, the less ethical it becomes. Instead of doing what is "right," the boundary becomes: "is it legal or within the law." O'Driscoll described it thusly (my italicized emphasis added):

The idea that multiplying rules and statutes can protect consumers and investors is surely one of the great intellectual failures of the 20th century. Any static rule will be circumvented or manipulated to evade its application. Better than multiplying rules, financial accounting should be governed by the traditional principle that one has an affirmative duty to present the true condition fairly and accurately-not withstanding what any rule might otherwise allow.

Congressional committees overseeing industries succumb to the allure of campaign contributions, the solicitations of industry lobbyists, and the siren song of experts whose livelihood is beholden to the industry. The interests of industry and government become intertwined and it is regulation that binds those interests together. Business succeeds by getting along with politicians and regulators. And vice-versa through the revolving door.

Piling on more rules and statutes will not produce something different than it has in the past. Reliance on affirmative principles of truth-telling in accounting statements and a duty of care would be preferable. Deregulation is not some kind of libertarian mantra but an absolute necessity if we are to exit crony capitalism.