You need rules – or “Free Market” isn’t “Free”

Reading through various conservative writings, one facet that keeps coming through is that business regulations are bad.  Businesses should not be regulated, because the “free market” will decide winners and losers, and the economy will benefit accordingly.   While it’s a nice theory, in practice, it has turned out to be not quite workable.  In order for it to work, it requires a large amount of enlightened self-interest, as well as the willingness to think for the long term.   As past and recent history have shown us, it turns out that there’s very little “enlightenment” when it comes to business self-interest, and the willingness to think long term has been notably absent.

Thus, the need for regulations and rules.  While one might plausibly argue about the need for a specific rule, or the level of enforcement, the  need for them still is there.   Using the ever-popular sports metaphor, everyone playing the game works from the same rule book, and there’s a referee to ensure that the rules are followed.   Otherwise, you end up with situations where one team is playing rugby while the other one is playing football.  While it would be entertaining to watch,  in terms of what’s happening on the field, it’d be real mess.

The “mess” on the field is similar to what happened.  The rules were relaxed or removed, and various businesses were allowed to make up their own as they went.  Along with that, the push to make short-term gains in profits led them to ignore the long-term impacts and viability of their business.  The “enlightened self-interest” – which I define as “is this good for the business in the long term, and is this good for the country we live in?” was pretty much thrown in the wastebasket in the rush to make a lot of money now.    The end result was the crash of a number of financial institutions, which almost took down the entire economy, and a number of preventable environmental disasters.  What they all have in common was the discarding of “rules” for short-term gains.

Hence, once again, we are learning that there needs to be rules.  No, businesses of all stripes don’t like them, but they’ve already shown they need them.  Because when they decide to make up their own, it turns out that no one – even the businesses – benefits.

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