Government agencies, bank chiefs, investors – all were taken by surprise in the credit crisis. The cause of most of their failings, as Philip McBride Johnson argues, was that they didn’t know enough about the affairs they were responsible for. Righting the financial system means correcting that. Laws that promote clandestine markets should be repealed.
As a child I was told: “Son, what you know will cause you worry but what you don’t know will kill you.” The comment was intended to refer to things like forgetting a spouse’s birthday, or a wedding anniversary, or an important meeting. But it has far broader application to any piece of information that, for lack of it, makes us especially vulnerable. And so, for that reason, the world today is clawing its way out of a financial crisis that blindsided all of us, including people who thought they were intimately acquainted with the...