I enjoyed reading an article which addresses the recent cries to regulate Facebook in order to better protect users’ privacy. The author, Richard Jones of Dechert LLP, urges caution based on parallels between the “current kerfuffle over Facebook and privacy” and “the Dodd-Frank mess” that followed the Great Recession.
Jones says the Dodd-Frank regulatory scheme consisted of “faux solutions, air freshener wafting over the midden heap of a deeply damaged banking and capital formation sector.” The “faux solutions” were made in haste because of cries for regulation based on a “narrative that banks and bankers were bad and needed to be beaten regularly, made to disgorge billions of dollars for alleged bad conduct (and thereby damaging capital while at the same time we were trying to increase it) and needed to henceforth conform to an exhaustive and elaborate skein of rules and regulations that, in some chalkboard exercise we were assured, would make banking safer and perhaps even end the business cycle.”
Dodd-Frank didn’t make banking safer, but Jones observed that it did enrich the “legions of staff, lawyers and accountants” needed to navigate the maze of the regulations. Jones argues that the “Dodd-Frank regulatory torrent was ill-advised then and I am certain that the current cri de coeur for regulating the internet without further delay is ill-advised today.”
The crux of Jones’ argument for not regulating Facebook rests in the phrase, “Act in haste, repent at leisure.” Jones claims this phrase “is not just a hoary old dodge, but a fundamental truth.” Jones counsels everyone to pause and ponder a fundamental, common sense question: “What exactly does everyone mean by regulating the internet?” He then presents cogent, common sense points for exercising caution before hastily drafting a broad regulatory scheme, which he summarizes as follows: “Someone said we become insane collectively and regain our sanity one by one. Seems right. The internet is too important. Connectivity is too important. We can’t afford to embrace insanity and then wait for regrets.”
Please read Jones’ piece and let us know if you agree or disagree.