This is the Cato Daily Podcast for Thursday, January 8, 2009.

I'm Caleb Brown.

The charge of the SEC is to detect and stop fraud perpetrated against average investors.

For the FDA, one charge is to actively prevent and contain outbreaks of foodborne illness.

Given the size of the tasks we assigned to these agencies and the volume of

warnings they receive about fraud or poor food handling practices do we end up

with a regulatory worst-case scenario that is an ineffective bureaucracy that

nonetheless lulls consumers and investors alike into an ill-advised complacency.

Cato Institute Senior Fellow and Editor of Regulation magazine, Peter Van Doerrin comments.

Lots of policy discussion. There's some important thing that sort of everyone assumes is obvious and easy and that's left to somebody to figure out.

And so detecting fraud, libertarians for example always say we're against fraud and then assume it's easy to detect it and that know, idiots can do it or something like that.

And you don't need a big government bureaucracy to do all that and all that.

And what's interesting is financial, the throughput of financial transactions in a day in the world's markets, in the which is the NSA is supposed to trap all signals around the world and what all agencies face that try to find mischief, that try to find stuff out there in the world that's bad. Call it prevention or

call it detection whichever you will. The problem is how do you find the needle

in the very noisy haystack?

Because through technological sophistication,

we can now collect all the information that exists in the way.

We can collect it. the NSA collects it and it puts it into a computer and then it has to have algorithms that say

Every time you find this kind of thing and they never tell us what that thing is,

send this to the inbox of an analyst who then looks at it. The SEC faces the same problem. And the FDA faces the same problem too in

detecting bad spinach or something like that. And we say, see what the press does,

it fails to think of the problem this way.

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