Today I read an interesting editorial by Kenneth Rogoff, a professor of economics and public policy at Harvard and former chief economist at the IMF. The original article can be found at "http://www.theglobeandmail.com/news/opinions/technology-complexity-economy-catastrophe/article15885 65/". In the article, he makes the claim that in our world today "the speed of innovation seems to be outstripping government regulators' capacity to deal with risks". I believe there is a difference between "can not" and "will not"
He uses the recent BP disaster as an example. He brings up Obama's proposal to expand offshore oil drilling, and advances in deep drilling. What I find interesting, though, is the fact that Obama made the proposal "under pressure from Republican opposition". Obama was formerly very adamant against the Republican slogan of "Drill, baby, drill"; to me, it meant that he understood very well the risks of offshore drilling and could have kept regulations tight. Of course, we know that he didn't, but that is very different from being "unable" to regulate.
Another example of a failure of regulation (but not, once again, the ability to regulate) is the fact that hundreds of millions of dollars are spent on research and development of oil extraction technologies, but only a paltry fraction (in the low tens of millions) is spent on technology used to contain and to resolve an accident such as the one currently being faced by BP. A government imposed mandate of a more balanced annual development budget focusing on both extraction and prevention/containment technology would go a long way in making sure that an event like this does not occur again.
Finally, there are many reports that state BP took many "shortcuts" prior to the accident and that regulators are extremely close to the industry (accepting "gifts" on occasion). This is another example of regulators unwilling to regulate properly.
It seems that (in BP's case, at least) there was no lack of ability to regulate, and that the real challenges lie in maintaining high levels of commitment to actually upholding regulations. On one point we can both agree upon, "we can ill afford to keep getting it wrong."