Who regulates the regulators? The answer is obvious: more regulators – and so on until infinity or the public purse runs out. New Labour came to office declaring that its priority would be “education, education, education”, whereas in fact we now know that it was “regulation, regulation, regulation”. Over the past few days the consequences have been put into sharp relief – and, as usual, precisely the wrong conclusions have been drawn: that we need yet more regulation.

Item one: the revelation of medieval standards of medical care at the Mid Staffordshire NHS Foundation Trust. That’s right, a foundation hospital, one which had gained this coveted status precisely through being able to jump through all the health department’s regulatory hoops, like a trained dog seeking its master’s chocolate button.

Charlotte Atkins, the local MP, points out: “Last week Bill Moyes of Monitor [the regulatory body for foundation trusts] told me in the select committee on health that the Mid Staffordshire Foundation Trust met its criteria in February 2008 after a lengthy assessment.”

Moyes has responded that, “At the time we tended to rely on other bodies” – he means other regulators, not the mortal remains of Mid Staffs NHS Trust’s former patients – “to bring us information, whereas now we look at a whole range of issues about quality, including things like complaints.” Things like complaints? I suppose we should be grateful the regulator has decided that the experiences of patients should be taken into account.

Item two: last week we also learnt the official findings into the outbreak of the fatal E-coli infection that struck 44 schools in south Wales supplied by William Tudor, the butcher. It was the second-worst such outbreak in British history – but the first to take place under the invigilation of the Meat Hygiene Service, created in 1999 as part of the Food Standards Agency.

Professor Hugh Pennington, who led the inquiry, said: “The signals that the premises and its practices were unsafe were strong. They passed up the lines of management in the Meat Hygiene Service. The abattoir was allowed to continue in business.” Of course it was. The visible manifestation of indifference would have been ignored by the “lines of management” as long as all the forms had been filled out properly (even if dishonestly).

Item three: Lord Laming’s recent review of child protection reforms since his Victoria Climbié inquiry, commissioned after the horrible death of Baby P under the eyes of Haringey social services. Laming observes that this notoriously inadequate department had received a three-star rating from Ofsted, the regulator, and also that social work is harder, not easier, to carry out “because of an overemphasis on process and targets”. We see no sign, however, of the government reducing this emphasis.

It is, in a way, understandable. In the private, profit-driven sector, directors rely ultimately on sets of figures – otherwise known as a balance sheet – to assess objectively the performance and health of their businesses. Those responsible for public services feel a desperate need to mimic this apparent objectivity but, all too often, they resemble the company director who is so immersed in management-speak that he can’t understand what the customers are saying in plain English.

Item four, and this is the Big One: on Wednesday Lord Turner, chairman of the Financial Services Authority (FSA), released his much-awaited report on the future regulation of banking and financial institutions. It is an exhaustive list of enhancements and enlargements of the FSA’s operations. Turner previously admitted that the FSA had not matched up to its task, saying it had been trying to regulate “on the cheap”. As a matter of fact the FSA is already costing approximately £350m a year to sustain. If that’s cheap, I wonder what Adair Turner would call expensive.

Turner would probably argue that, given the cataclysmic consequences of the credit crunch, almost any regulatory cost is worth paying if it succeeds in preventing a recurrence. The important word, however, is “if”. As Andrew Lilico, the economist, points out in What Killed Capitalism? (published last week by the Centre for Policy Studies): “It is a mistake to believe that the state can create a regulator who knows the risks . . . of massive financial innovations of the sort we have seen in recent years. Indeed, if we pay regulators even more, and if we hire all the best minds to work as regulators, all that would be achieved would be to create even more false confidence in regulatory badges. Then, when a problem finally did defeat them (which would be inevitable), it would not be spotted until even later. The ensuing crash would be even worse.”

We are constantly being told that the financial crisis was the direct consequence of a lack of regulation and political oversight. Up to a point, Lord Turner. Yet it can be equally asserted that political interference with markets is the real villain of the credit crunch.

We know that the proximate cause of the crash was the dramatic rise and fall in the US mortgage market. Yet the two government-sponsored enterprises known as Freddie Mac and Fannie Mae were, on their own, responsible for guaranteeing half of that $12 trillion market. From its inception as part of Roosevelt’s New Deal, Fannie Mae (and later Freddie Mac) was designed to make housing finance available to “ordinary Americans”. Under later Democrat presidents such as Jimmy Carter and Bill Clinton, pressure was put on lending institutions to make loans to minorities with poor credit histories. The motives were high-minded and, at the same time, vote-winners. What could be nicer?

The complaints of some banks, that they were having to abandon their normal lending criteria under pressure from equality regulators, were ignored. It is obviously true that many more financial institutions saw this as an opportunity to make vast amounts of money, but the point is they had reason to believe that the authorities were so politically committed to wider home ownership that they would always step in to prevent the whole edifice from collapsing.

Indeed, last year Fannie Mae and Freddie Mac were rescued after reporting more than $100 billion of combined losses in 2008. I find it fascinating that while Washington is in a state of white-hot fury about the retention bonuses being paid to the executives of AIG, the rescued insurance group, there have been no similar complaints from the politicians about the bonuses now being doled out to the executives of Fannie and Freddie – but then, they are almost part of the regulatory class. Similarly, there was no question of anyone at the supposedly “failed” FSA being stopped from receiving his or her 2008 bonuses.

Perhaps the biggest absurdity of all is that the overriding problem now is not that financiers are taking too many risks and thus require the attention of a new super regulator, it is that they don’t want to take any risks at all. That is what a credit crunch means.

Thus Gillian Tett, the distinguished capital markets editor of the Financial Times, wrote on Friday: “Where is Gordon Gekko when you really need him?” Her point is that banks have been shutting down their proprietary trading desks, partly under political pressure, and as a result “there is a dire shortage of capital to organise or fund even simple restructurings of companies, distressed investment entities or anything else.”

Oh, one final point: the newspaper you are reading is part of one of the very few industries not burdened by the requirements of statutory regulators. It’s not too bad without nurse, don’t you think?

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