Please read this fine Megan McArdle post:
The passion is certainly real, and understandable. But the attachment to Glass-Steagall is not. Of the hundreds of times I’ve seen this, in all but two or three cases it’s been absolutely clear that the person advocating this could not describe the content of Glass-Steagall (presumably the one passed in 1933), nor the multi-decade unraveling of its major provisions. If anyone makes any of the obvious criticisms–“Really? You want to bring back Regulation Q?”–they’re not even particularly sheepish about admitting that well, of course, they’re not exactly familiar with the whole thing, but . . .
What follows is usually a defense of the one provision they are familiar with: the enforced separation of commercial banking and investment banking activities. But when asked how this would have helped, when it was the pure play investment banks created by Glass-Steagall that had the most trouble, I’ve never seen any of Glass-Steagall’s fans provide a convincing explanation; indeed, it’s often been quite clear that they weren’t aware of this fairly well-known fact.
So how did they fixate on Glass-Steagall?
She goes on to give a charitable interpretation of why people adhere to such stories. You may get some mileage out of it, but I suspect you’ll get more from your thoughts. I have my own preferred interpretation. In any case, I love her recommendation (not sure my students would):
Why, then, are the ignorant not merely so much more passionate, but so much more certain? It is a great mystery. But I think we could vastly improve the policy discussion by requiring everyone to write 100-word essays on what their preferred policy actually is, before they are allowed to talk about it.
Would this be a brand of paternalism I’d support? Imagine giving someone the power to enforce this? Yuck.