Thursday, May 9, 2013

You want business strongly regulated? Then what you really want is stronger markets

George Mason University economics professor Don Boudreaux makes just that point in his most recent column in the Pittsburg Tribune-Review.  He uses the term "competitive regulation" to show that markets, when left free to function properly, have their own incentives for good behavior and punishments for bad.  Here's the opening paragraph of this clever article:
The demand for government regulation springs from the lack of understanding that markets are amazingly proficient at regulating themselves through the competitive process. This process involves firms' competition for customers, workers, financing and suppliers.

Call this regulation that arises through the natural operation of markets “competitive regulation.”
It's a relatively short, enlightening article and can be found here.