12/10/2010 05:57 pm ET Updated May 25, 2011

Transactions: Dec. 13, 2010

In the realm of unquestioned truths, the virtues of competition appear unassailable. We may doubt the wisdom of efficient markets, we may wonder at the ability of laissez-faire markets to avoid breakdown, dysfunction, crashes, panics, palsies, disaster. We may scoff at the power of markets to discipline wayward denizens, and we may accept that they cannot be proxies for every damn thing in life. But we embrace competition, down to our tapping toes, whether it's a race between thin-shinned thoroughbreds or 22 men encased in plastic slamming into each other on cold winter days. Competition, despite the occasional concussion, brings out the best in us. Competition burns off impurities, cleanses the soul of fat, real and metaphorical. Competition eliminates the weak, the dumb, the lazy, the stragglers, the parasites; it raises our game, whisks us, with sweat stinging our eyes, to the next level, which resembles the mezzanine at a nearby Hyatt. Competition keeps us alert, in fighting trim; it's the creative-destructive cure for the enervation that steals over capitalism now and again. Competition is built into evolution itself; nature, red of tooth and claw, battling for supremacy or survival. It's beyond good or evil, like sap rising and leaves falling.

The magic of competition is ubiquitous: birds, bees, major corporations. There is antitrust of course, which is meant to return competition to markets that have devolved into boggy monopolies or oligopolies. Competition fires the engines of privatization programs, in which state-owned enterprises are released to wander the kill-or-be-killed forests of the private sector. Toughen up, lad, the nanny's gone! Public schools face off against charter schools; utilities try to be hip. Even regulators can't escape. Regulators are warned to get out of the way of competition, like a matador sidestepping a charging bull. Moreover, as Alan Greenspan once insisted, regulatory competition makes regulators more, well, competitive. In the debate over the Dodd-Frank financial reform bill, the failure to eliminate regulatory bodies -- instead we got another committee, a consumer agency and a million fill-in-the-blank rules -- was (weakly) justified on the basis of competition and mutual oversight. For years Delaware's pre-eminence in corporate law has been characterized as a competitive race to the top: The cream rises. A variation on this is Michael Porter's notion that rigorous domestic regulation provides a comparative advantage and nurtures lean, tough, scratch-your-eyes-out competitors. Not everyone, alas, agrees.

And yet and yet. Some of these races to the crown of Mount Baldy turn out to be toboggan runs to the bottom of Lake Misery. Some privatizations -- airlines, utilities -- look increasingly problematic. Bethany McLean and Joe Nocera in their book on the real estate bubble, "All the Devils Are Here," touch on financial behavior that, to say the least, was less than optimal. Competition by bank regulators led not to better oversight, but to a reduction of standards in a brazen play to attract "customers." Lenders locked in competition slipped toward fat, easy profits from subprime mortgages like soap on slime. Wall Street firms flung securitized product out the door, too busy to check the ingredients. Ditto investors. Credit rating agencies slapped triple As on warm roadkill. And look beyond regulation. Has intense Internet competition led to a higher level of discourse or to a rising tide of inanity? (Define "inanity.") Has cable produced better television or worse? (Define "better.") Has competition between colleges for students created smarter grads (define, well you get it), or simply more fun, food and sports? Has feverish political competition produced wise policy or widespread pandering?

This isn't multiple-choice easy. There is good and bad competition, and often both. How do we know which is which when we design reforms or propose restructuring, say, banking? We're aware some giant banks screwed up; we also know that many feisty S&Ls underwent mass death. And why did Delaware and the Office of Thrift Supervision diverge in the snowy woods? Shareholders today reward Delaware corporations for signing up for a consistent, knowledgeable, efficient legal regime, although there was a time when Wilmington looked uncomfortably cozy with corporates. Why did standards break down in banking, credit rating and Wall Street? In those cases, the ultimate monitors -- shareholders -- appeared not to give a damn; in fact, they cheered the move to lax venues and crappy products, if they had a clue at all (this includes Warren Buffett, a big Moody's shareholder and fan of natural monopolies). In all of these struggles, someone must enforce a standard, from shareholders or voters to, in cultural realms, customers, users, readers, ticket buyers, critics. But if no one cares, if standards are viewed as relative, anachronistic or somebody else's problem, competition generates no virtue at all (OK, define "virtue). Competitiveness without virtue is just a naked scramble for spoils. Try to glorify that.

Robert Teitelman is editor in chief of The Deal.