Rules are different from regulation. Rules are like books in a vast Borgesian library. Regulation is a process and a result. In theory, the two are related, like literacy and intelligence. In fact, we seem to have untethered the pair and sent them over the waterfall separately. In the best of circumstances, they check each other. Effective regulation obviates the need for endless procreation of rules. And sensible rules contribute to efficient oversight, while not obscuring it, confusing it or creating opportunities for misdeeds. We have lost that equipoise. (This applies to other situations as well, such as a gargantuan tax code that hardly inspires better compliance. Then there's Europe. No one has created more rules than Brussels. And what have they gotten us? Greece.) Proof? We have today, as we had throughout that precrisis wonderland of deregulation, immense, swaying (mostly vacant) Babel-like towers of rules. And yet we also have a large, worrisome regulatory problem.

Excessive rulemaking produces a trilogy of policy evils: confusion, paradox and unintended consequences. The populace and its tribunes in Congress (both parties) believe, like The Economist, that rulemaking and regulation are synonymous. This is not ideological, but faith-based. They believe in rules as they embrace the Ten Commandments, crime and punishment, right and wrong. Rules are necessary to identify, like a neon arrow, bad behavior. Regulators, judges and politicians can never be trusted: They are, alas, human. As a result, rules must be rigid, forceful and narrowly dogmatic. But because the world is fluid, uncertain and hip-swayingly ambiguous, this requires exceptions and adjustments, which explains pages of teeny-type amendments and emendations that in turn create full employment for lobbyists, lawyers, accountants and bagmen. (We haven't even touched on sloppiness and stupidity.) It also produces odd Weberian effects. Proliferating rulemaking is a reaction to complexity and bureaucracy that, in turn, spurs them on -- in Congress, among regulators and the regulated. Regulators don't lose power in such circumstances, they accrue it; all those rules provide greater latitude for interpretation. But they tend to regulate most aggressively when they think their political masters care, that is, in a crisis -- when it's too late. In the end, excessive rulemaking undermines regulation, as a Tower of Babel drowns out sense.

What was the original sin here? Fingers are quickly pointed: financial complexity, innovation and global competition; free-market ideology, Ayn Rand and efficient markets; greed, corruption, self-interest, cultural decline, contraception. The paradox, which shows up through history, is that an agitated democracy demands that its problems be taken out of its fumbling hands and given to some nonhuman moral mechanism: rules, markets, Leviathan. This desire for control then slams into reality. How do we escape? The obvious answer is to say adopt principles, not write rules. But this is laughable. We have a principle-based regime in Delaware, which works nicely, but which has steadily lost ground to federal law driven by Congress. A principle-based system would require us to have, well, widely shared principles, not to say confidence in regulators and regulation. We lack all of that. Instead, we have created a malign feedback loop. Certainly, since the '80s and accelerating in the '90s, one crisis has followed the other, bubbles leading to scandals gestating meltdowns, each spawning new rules, which further erodes the credibility of anyone who nears this morass, and so on. Without a consensus as to what regulators should be doing -- safety or efficiency, public good or private enrichment -- we seem fated to be entombed within the shell of our own desperate yearning for control.