Answer to Question #81331 in Economics for Kay

Question

The CNBC Accredited Investors article is an example of government intervention where we limit who can purchase a good for their own good, at least in theory, via regulation. I would call this a "soft" intervention compare to creating a whole federal agency like the FDA or CFPB. Contrary to what most people believe, financial advisors and financial planners do not have a government stamp of approval; their certifications are issued by the Financial Industry Regulatory Authority (FINRA), a private firm created by the financial industry to regulate their own practices. Basically, the FINRA decides who can have a investment license after passing exams and other educational requirements. What are the pros and cons of the current system? Do you think it is working well or do we need more government intervention?

Answer 1

The less government regulation is created, the lower is inefficiency and deadweight loss. So, we think it is working well and we don't need more government intervention.