This is a story about a mystery widely discussed in recent months: the Governor's eyebrow. Let's approach the facial hair by way of a riddle. What do the Baby P affair, the assisted suicide debate (rekindled yesterday by Patricia Hewitt), Lord Turner of Ecchinswell's report this week on the future of financial services regulation and a new scrap between The Guardian and Barclays about the avoidance of taxes, have in common?

In every dispute the Governor's eyebrow stands twitching at the centre of arguments about methods of adjudication. Oliver Letwin, the Tories' policy chief, set this out in a speech about Baby P this year: at issue (he said) was a choice between rule-based and judgment-based regulation.

The rule-based approach aims to capture what a regulation means in careful, comprehensive, exhaustively assembled words: an authoritative text. At its best this offers certainty to citizens anxious to know if they are complying with the rules. At its worst it leads to the letter trumping the spirit of regulation: to box-ticking and the recruitment of hordes of lawyers to help people to look for ways round the spirit of the rules while obeying their letter.

The judgment-based approach is what is meant by the Governor's eyebrow. At the Bank of England the Governor had the power to raise an eyebrow at a financial practice, murmur that he didn't care for it, and wave it away without explanation. You could call it the “doesn't look kosher” rule or the “this stinks” method of adjudication. Parents have their own version in responding to children who keep demanding reasons: “Because”.

Of course, if the spirit rather than the letter is what counts, somebody has to interpret that spirit in any particular case. At its best, judgment-based regulation cuts through legalism and nit-picking; it ensures that quibbles about definitions never cause us to lose sight of the big picture - the overall purpose of the rules. At its worst, it allows an individual or committee to regulate on the hoof, giving adjudicators an almost priestly role, interpreting the rules at whim.

Mr Letwin attacked rule-based regulation. He argued that Haringey social workers had paid too much attention to box-ticking and too little to making their own personal judgment on a vulnerable toddler. Somebody should just have stood back, thought about it, taken a deep breath, and ordered the child to be taken from his mother.

Why? Because.

Admittedly Lord Turner uses more words than that in his detailed report. The Government had asked him to propose “a regulatory response to the global banking crisis”, but in doing so he took his own measured swipe at rule-based regulation. “Regulatory and supervisory coverage,” he says, “should follow the principle of economic substance not legal form.” He thinks that the Financial Services Authority became bogged down in “process” or box-ticking. He wants “macro-prudential” judgments - by which he means asking, not whether a practice dots the Is and crosses the Ts of regulations but whether it's basically a wise idea. Or (as he puts it) requiring the FSA to “focus on business models, strategies, risks and outcomes, rather than primarily on systems and processes”.

Ms Hewitt's campaign on assisted suicide - or rather the campaign the former Health Secretary publicly joined yesterday - asks for the opposite: for a rule-based approach, but under a new and more liberal law. Effectively what we have now governing assisted suicide is a judgment-based approach that overlooks the letter of our (illiberal) law. A crime may technically have been committed but it's up to the prosecuting authorities whether anyone is actually prosecuted. Few are. The Attorney-General's eyebrow fails to twitch.

The row between Barclays and its media accusers revolves around Britain's myopically rule-based approach to tax law. Nobody is accusing the bank of breaking the letter of the law (tax evasion), but critics argue that finding complex routes for avoiding tax amounts to breaking its spirit, and should be unlawful. Fair enough. But it isn't.

Perhaps, though, it should be. Since reading law at university I have been a strong believer in the primacy of the written text and the legal certainty that codification can offer; but I begin to wonder whether, led by America, we are cultivating so vast, so formidable (and so expensive) an army of lawyers - their careers and expertise dedicated to thwarting the State's purpose by outwitting the State's own lawyers - that the profession is becoming a fifth column within the nation. Government then has to hire even more lawyers, at even greater expense, to combat the loophole-seekers.

The cost (to both sides) of this glorified chess game is huge: surely a significant drain on our economy and competitiveness, unproductive and sterile in its consequences. From financial regulation to health and safety, from environmental health to accident and insurance claims, businesses large and small, and the self-employed, need lawyers to combat public sector lawyers, themselves hired to combat private sector lawyers, hired to combat public sector lawyers...

...And the question arises: wouldn't it be cheaper, wouldn't it be faster and simpler, and would it really add much to the sum total of general injustice, if we moved in the direction of appointing more commissar-like adjudicators: men and women empowered to consider the spirit and purposes of regulation and then to pronounce definitively, to deem - their judgments final, with no rights of appeal or judicial review?

Some indication of a growing feeling that legalism and lawyers are becoming an infestation is provided by the development of so many short cuts and bypasses: ombudsmen, the small-claims courts, employment tribunals and the parking adjudicators system.

The very words “reasonable” and “unreasonable” in English law are themselves concessions to the impossibility of spelling out and providing for every imaginable circumstance or defence. Put the word “reasonable” into a statute, and you turn the court into its own commissar.

It would be possible to go too far. But if Lord Turner and the FSA could examine a banking practice, scratch their heads, and simply say: “Sorry. Don't care for it. Stop”; if Revenue & Customs could investigate a piece of tax avoidance, ponder, then pronounce: “Unacceptable. Unscramble it”; and if the Attorney-General could do more openly and cheerfully what she does privately already - call the Crown Prosecution Service off - then I shall take some persuading that, after a barrage of complaints from legalists, much ill would come of it.

And the Governor's eyebrow comes a good deal more cheaply than the barrister's wig.

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