In the U.S., the Senate and the House are trying to reconcile their bills for reform of the financial system. At the same time, the EU also is trying to reform its rules governing the financial system. And as the G8 and G20 meetings approach, all the countries are trying to reconcile their different approaches. There also have been countless critics of the various proposed reforms; some arguing that they do not go far enough, others claiming that there is no need to change the rules.

I dismiss the critics who argue against reform and in favor of less intervention. In their eagerness to diminish the role of and need for government, they ignore very important facts. Markets do not exist in a vacuum, although traditionally trained economists would never know this after multiple courses and textbooks on microeconomics. The theories do not describe the underlying rules that constrain the behavior of the players in the markets. Markets are circumscribed by rules. Markets cannot be defined in the absence of these rules.

There should be no debate that rules, laws and their enforcement are needed. What is debatable are what is the best set of rules and what degree of enforcement is best. The debate is particularly important at this time as governments around the world tackle the fallout from the financial market meltdown in 2008.

Most countries have similar rules and laws. However, their interpretation and objectives do differ among countries. So too does the enforcement of the rules. There are also differences among countries in the acceptance of the rules by the people. History, culture, language and religion have all played key roles in influencing the evolution of rules.

The EU, the U.S., Canada and the other members of the G8 and G20 are unlikely to reach a consensus on a comprehensive set of rules for the financial markets and institutions.  It is naive to believe that any single set of rules will satisfy all parties. Furthermore, it is simplistic to assume, given the different histories of countries, that one country’s rules are superior.

What we know with certainty is that rules do and will continue to change in all countries. They will change as politicians and bureaucrats respond to pressures, actual and perceived, from voters and individuals and governments in other countries.

We also know that not all rules make sense. They may have at some point in the past, and they simply became outdated. Or they never made any sense; they were implemented because of external pressures from lobbyists. But in a democratic system, the electorate likely will express their displeasure with certain rules and vote out the “guilty” party.

The opinions expressed in this blog are personal and do not reflect the views of either Global Brief or the Glendon School of Public and International Affairs.