Deregulation properly understood

I keep hearing from people (politically involved or not) that the current bubble popping loudly on Wall Street results from "Deregulation," which is, of course, deeply associated since Reagan's times with Republicans.  Certainly both Obama and Biden threw that word around a lot.  What irritated me was that neither McCain nor Palin stepped up to explain the difference between Deregulation (which is a good thing) and the fact that, in a deregulated environment, the government's appropriate role is as a policeman. 

I've quoted below, with some modifications in the first paragraph, a piece of a post I wrote on my site right after the Palin-Biden debate, and the more I think about it, the more I think I might be highlighting a very important distinction.  I know that Biden and Obama understand what's going on, but are hiding the distinction, and I know that McCain and Palin  . . . well, I assume that McCain and Palin see the distinction so clearly that they don't recognize that the public is confused.

Regarding the debacle on Wall Street, I wish someone would explain clearly the difference between deregulation and oversight, which is what McCain wanted, and government control without oversight, which is what the Democrats succeeded in doing, a fact that led us to the financial woes we face today.

The problem on Wall Street wasn't deregulation.  Instead, it was a problem of too much regulation - that is, the government started telling banks how to loan money.  The instructions required loans that went against banks' financial interests, so banks started doing funny-money stuff to protect themselves - and they did so with Fannie's and Freddie's active participation.  That was the Democratic side.

None of this would have happened if there had been oversight.  Oversight doesn't mean telling Wall Street what to do, it means policing Wall Street to make sure that, when it makes business decisions, it does so honestly.

Obama/Biden want to increase how much government dictates to Wall Street, and we've seen what a disaster that is.  McCain/Palin want to get government out of bossing Wall Street around, and get government to do of its more natural and appropriate role of policing Wall Street.

Those two concepts are hugely different from each other but, because nobody's articulating this difference, including McCain and Palin, Obama and Biden are getting away with conflating the terms, muddying the waters, and besmirching McCain's reputation and foresight.

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