The knowledge required by regulators i.e. the Government is dispersed throughout the industry and broader economy. For regulation to work, that dispersed knowledge must be centralized in the regulatory agency. To successfully accomplish this requires central planning of the industry, if not the economy. But the local knowledge of specific circumstances of time and place cannot be aggregated in one mind or agency. We know that is impossible, and that impossibility was the reason for the collapse of the Soviet Empire and the transformation of the Chinese economy.
Richard Epstein, University of Chicago Law professor, explains “we need simple rules for a complex world.” What we do not need is more government regulation.