Ruminations on regulation and our political order

This is my response to a friend who was and is supporting national regulations as a general principle and arguing that my preference for state regulations is naive and even inane, at least in today's world. I am also posting his last email so you can read what he has to say as well. First, is my friend's post:

http://www.nytimes.com/2010/07/11/business/11volcker.html

How can serious financial regulation be done on a state by state manner?

But I'm being swayed by some of your arguments, especially in light of the probable Federal challenge to Massachusetts gay marriage laws. I forget that "the state" has generally been liberal. But you're right, have a powerful state imposing national laws that strike me as unjust, then you have problems. A nationwide ban of all abortions would be troublesome to say the least. A nationwide ban of all alcohol was troublesome and a disaster. You've got a point, Peter, and you're making me think, always a good thing. But it's only a point, not a hammer.

Here is my response:

Alright, here is the problem as I see it. If you found me up shit's creek without a paddle, and you offered me a paddle, I would take it. But I would still be up shit's creek! Point being: We have created an economy that makes state regulation seem inane and it is probably inane under the circumstances. So in this sense you are correct with your question below. But this is really no different than arguing, as I do, that because we have created and embraced an empire, because we have troops stationed throughout the world, when the powers that be argue that "national security requires this limitation of our personal liberties or that limitation of our personal liberties," they are, logically, correct. But that only tells me that our foreign policy is inconsistent with maximizing personal liberty and, hence, it needs to be changed for the sake of our liberties. This is why it is necessary to try to see our issues outside the parameters of our conventional political discourse. Under those parameters, we never get to the really important and some would say the only important issue: Is the character of our foreign policy "republican," in the sense of being consistent with maximizing personal liberties?

"National security" is a term that is too often taken to be "objective," that is, the demands of "national security" are taken to be the same regardless of the character of our foreign policy, which is just not correct. If we intruded less into the world, the demands of national security would be different. The same phenomenon takes place with the term "the economy." That is, the demands of "the economy" are taken to be the same regardless of the character of our economy, which is just incorrect. If we have created an economy that demands national regulation, then one can argue that we should change that economy, especially if, as I think, national regulation more often than not does not "work" - depending on what we mean by "work." To return to my original metaphor, if we have created an economy [and social order] that puts us up shit's creek, then the paddle of regulation, while useful, is only that, useful. But it does not and cannot get us out of shit's creek. And, of course, if we are up shit's creek, then we should be trying to get out of it, which requires more than paddles/regulations.