From Friedman and Kraus' excellent book, Engineering the Financial Crisis,
It is not because regulators should be blamed for the crisis: nobody should be blamed for honest mistakes or even for ideological thinking both of which, we maintain, are inherent to the human conditions and are, moreover, involuntary. Rather, it is important because once one recognizes that 'deregulated' capitalist finance did not cause the crisis, but rather that regulatory ignorance and ideology, apparently, transmitted to the regulators by modern democracy's most trusted academic experts, may have caused it, one has to wonder whether modern democracy has a potentially fatal flaw: the mistakes that may flow from the cognitive limitations of modern democracy's all-too-human decision makers.
The authors nicely state the basic problem with central planning and top down regulation: knowledge.
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