wkmac
Well-Known Member
Here's an article I wrote, published by The Times this week.
The anti-capitalists, now more than 50 days outside St Paul’s, have a point: capitalism is proving unfair. But I would like to try to persuade them that the reason is because it is not free-market enough. (Good luck, I hear you cry.) The market, when allowed to flourish, tears apart monopoly and generates freedom and fairness better than any other human institution. Today’s private sector, by contrast, is increasingly dominated by companies that are privileged by government through cosy contract, soft subsidy, convenient regulation and crony conversation. That is why it is producing such unfair outcomes.
Item: the finance industry, protected from upstart competition by high regulatory barriers to entry, handles the supply and demand of a good — money — that is priced by government fiat. For doing so, it trousers big bonuses even when arranging the issuance of bonds to pay for the bailing out of itself. That’s capitalism, but it’s not a free market.
Item: the private finance initiative suits government by postponing cost, suits business by giving it handsome returns — and roughly doubles the cost of infrastructure to taxpayers, the Treasury Select Committee says.
Item: The planning reforms were drafted in close consultation not with real people who want to build conservatories, but big developers.
Item: the defence, transport, energy and healthcare industries live almost entirely at the whim of government procurement, subsidy or regulation.
We must distinguish two meanings of the word “market”: one is “commerce”, a forum where people exchange goods and services, for consumption, in freely competitive ways. The consequence is innovation, efficiency and general improvements in quality and price for which regulation is barely necessary, except to deter monopoly and enforce contract. The reason that your toothpaste is cheap, available when you need it and not substandard is that people are competing to supply your needs, rather than because armies of trading standards officers make it so.
The other meaning of the word “market” is a casino where you buy goods for resale (like stocks and shares) and speculate on them. Such markets are necessary to allocate capital but they are prone to booms and busts and need regulation. They also produce unequal outcomes and tend towards monopoly. The housing market should provide a service (accommodation) but it keeps being turned into a casino. Instead of deregulating finance and over-regulating commerce, we should have done the opposite.
read the rest here
