John Stossel

We almost always assume that top-down government regulation is necessary, even though history says otherwise. Did you know that stock markets began without government regulation?

Stringham researched how the first stock exchanges developed in London in the 1700s: "Government refused to enforce all but the most simple contracts. Nevertheless, brokers figured out how to do short sales, futures contracts, options contracts -- even though none was enforceable by law."

They came up with private enforcement.

"They traded in coffeehouses. And after a while, they decided: 'Let's enforce rules within this coffeehouse. If you default, you're going to get kicked out of the coffeehouse, and we're going to call you a lame duck.'" (Because you had to waddle out of the coffeehouse. That's actually where the phrase "lame duck" originated.)

Years of consumer reporting have taught me that such private regulation is better for consumers than the piles of rules produced by our bloated government.

Worse, government's micromanagement stifles innovation. Companies now invest in lawyers and "compliance officers," rather than engineers and creators.

Those that don't may get shut down.

Intrade is an innovative "prediction market" website where people bet about future events -- who will win the Oscars, elections, etc. The betting odds are great indicators of what will happen in the future because people think carefully before putting their money on the line.

But a government agency called the Commodity Futures Trading Commission determined that Intrade's bets are "commodity options" and Intrade does not have the right license to trade those options. The agency sued, and Intrade decided it had to close its site to Americans. The result: We lose knowledge -- and opportunity.

President Obama is wrong. We don't need new rules. Government should stop adding regulations -- or try following the Stossel Law: For every new rule, repeal two old ones.

John Stossel

John Stossel is host of "Stossel" on the Fox Business Network. He's the author of "No They Can't: Why Government Fails, but Individuals Succeed." To find out more about John Stossel, visit his site at > To read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at ©Creators Syndicate