Those who are allowed to make offers to us should be scrutinized
Whether Evaly is actually bust is, at the time that I’m writing this, still unknown.
Where all the money went, why refunds are taking so long – well, I can make a pretty good guess, as can you, but none of us knows, absolutely, just yet.
We can however use this as the start of a useful discussion about when regulation is required.
By regulation here I mean the rules used to stop people doing a thing, rather than laws to punish them after they've done a bad thing.
The difference is important because punishing theft, say, is what we do after something has been stolen. We know it has been, we can prove it, now someone's going to jail.
Regulation, on the other hand, all too often stops people from even trying.
Which means that yes, we might well stop some bad things happening – but we might also stop successful attempts to make use of a particular tactic or activity.
Given that most advances in life, technology, and the economy come from people trying things out, we don't in fact want to stop people taking risks and trying new things.
But then again there are certain things we really just don't want people trying.
So what we desire is some system of deciding. When do we regulate, or ban, an activity and when do we just allow the criminal law to clean up after people have done something wrong?
For example, and just imagine, someone started to sell things online at massive discounts in return for upfront payments. If someone abused this system to steal would that mean we should just prosecute the thief? Or that we should regulate to ban advance payments? Or discounts? Or selling online?
The correct answer comes from human psychology.
Much of life is a repeat game: Which type or brand of rice we buy, what fragrance of soap, the blue or the green t-shirt.
These are things we do many times and, as it happens, we humans are pretty good at getting repeated actions right. Sure, we might buy the wrong thing the first time, even the third, but we do zero in pretty quickly on what suits us, is a good deal, is to our taste.
This means that in those parts of life where it is a repeat game we can leave simple market processes to do the regulating.
Of course, we use the criminal law to punish those who abuse the system, sure we do – and long jail sentences please too.
But we don't need to regulate so that people cannot buy the wrong rice, or a silly scent, or that pink just doesn't suit you so you cannot try it. That means we don't stop people trying out, perhaps liking, that type of rice, soap or colour of t-shirt.
However, this system rather breaks down when it's something we do rarely like, say, get a mortgage, or buy a pension.
This is something we might do only once in an entire lifetime.
Finding out the pension was the wrong one, or with a crook, well, it's a little late to find that out 40 years later, isn't it? By then, the crook's in the next country, and has spent the contributions you were making for all those decades.
This gives us a reasonable initial framework for what we should be regulating.
Those big decisions that we make rarely should indeed be regulated.
Those who are allowed to make offers to us should be scrutinized. The offers they make should be checked before they are made; someone needs to run that slide rule over them before we lay our money down.
But things which one does regularly and that have no great effect if they go wrong? Leave it to reputation and market forces.
Not because we think that the fraudsters shouldn't be found out, but because that's the best way, on balance, to do the finding out. An army of irate housewives complaining about the soap or the rice works better than some bureaucrat sitting in an office.
The background point here is that of course we all agree that everything needs regulating.
The question is, who should it be regulated by?
Often enough we the consumers do that regulation rather more efficiently than the government.
And when we can't do it ourselves, we have to call upon the government to regulate on our behalf.
Well that, and also to jail the crooks who take advantage of us.
Tim Worstall is a senior fellow at the Adam Smith Institute in London