One popular meme is that the financial crisis was caused by deregulation in the banking and financial sectors. Accordingly, suggest the memists, free markets should take the blame and more government regulation is the solution.
When did this deregulation take place? One measure of the degree of regulation is how much the federal government spends to craft and enforce regulations in various sectors: consumer safety, environment, energy, homeland security, and so on. The more the government is regulating, the higher its budget should be; and the less government is regulating, the lower its budget.
1960: $190 million
1970: $356 million
1980: $725 million
1990: $1.598 billion
2000: $1.965 billion
2007: $2.065 billion
2008: $2.294 billion
2009: $2.343 billion
Another measure is the number of government personnel employed in crafting and enforcing regulations. The numbers for Finance and Banking:
Other measures of degree of regulation? Conclusions?
Source: Veronique de Rugy and Melinda Warren, “Regulatory Agency Spending Reaches New Height: An Analysis of the U.S. Budget for Fiscal Years 2008 and 2009” [pdf].