There are many other organizations beside the government and the firm. But all of them, whether political party or revolutionary movement, university… - Kenneth Arrow

There’s a famous Churchill quote: “democracy is the worst form of government, except for all the others.” That applies to regulation as well. In the late 1800s, we had a natural monopoly: railroads. The government created a regulatory enterprise – the Interstate Commerce Commission – and of course it was captured. But it still made a difference.
I think we just have to accept that capture does occur, but it’s limited. The Federal Trade Commission, for example, is a pretty active body. Monopolies have been broken up. The AT&T telephone monopoly was broken up in 1982 – Stigler was still writing about regulatory capture then. AT&T was a classic monopoly, but a pretty benevolent one. It delivered good service – rates were too high, but not by that much. It didn’t necessarily pass on value to the consumers, but Bell Labs were a source of great innovative function. Nevertheless, it was broken up by antitrust measures, brought on by government.
So there is regulatory capture, but it is by no means complete. Regulations do play a role.
One example of non-regulatory capture fighting against effective regulation was during the run-up to the 2008 crash, when several officials argued for CDOs to be regulated, which means they would have had to meet certain requirements of transparency. This was not accepted. I’m not saying the crash could have been avoided if that happened, but that would have made a big difference.

If the state of information (the set of signals received) is given and constant, then optimal choice is a problem of decision making under a given uncertainty, a situation that has been the subject of considerable analysis in the last thirty years. The problems of the economics of information proper arise when the probability distribution of states of the world is a variable. In the language adopted here, the signals received can vary. The existence of signals creates two important possibilities for the improvement of decision making. The first is taking advantage of the existence of signals. If the individual knows that a signal will be received before the decision has to be made, his optimal choice should be a function of the signal. We can think, alternatively but equivalently, of making the decision after the receipt of the signal and basing it on the probability distributions of consequences conditional on the signal, or of making the decision in advance for all possible values of the signal.

I then follow up with four major aspects of economic research in the last 60 years, the period of my scholarly activity. One, econometric methodology and practice, is of such fundamental importance that it cannotgo unnoticed, although I played no role in it. With the other three, general equilibrium, dynamic processes, and uncertainty and information, I was more intimately involved.