Clear Rules, Predictable Outcomes
THERE is sometimes an apparent tug of war between free markets and strong government regulations.
The way a few businessmen talk, the way to heaven for them is paved with actions removing unnecessary rules and regulations that simply stand on their way. To some extent such a hope is justified. Bureaucracies tend to stifle and to block. They issue many rules, some of which are insane or can push people close to becoming one. Moreover, many of those rules simply complicate the way of doing business and make it much more expensive. For many businessmen, therefore, the government that interferes least is the best.
But market-oriented businessmen must also recognize that markets are blind, and greed prevalent. Market forces need to be directed within clear parameters and subject to a few clear rules. The animal spirits those market forces unleash need to be restrained, since some market impulses are not necessarily benign or conducive to social order and community welfare. The eye of government regulators should help guide market forces towards over-all gains from competition and towards properly safeguarding the broader economic interests.
Thus, a proper balance needs to be struck between two extremes. The first extreme, having no laws and rules, would bring us back to the jungle, where the strongest would rule on the basis of sheer competitive power and might. The second extreme, having everything subjected to iron laws and draconian rules, would bring us back to a totalitarian world, where dreams inevitably turn to nightmares.
In fact, free markets cannot remain open and free without the strong hand of government. To safeguard freedom of competition and openness of economic and commercial transactions, government must set forth clear rules and put in place effective mechanisms to enforce them. Anything that restrains trade has to be acted upon and removed. Anything that violates contracts has to be judged and punished severely. Anything that undermines trust and confidence in the market system has to be prevented at all cost. …