Here's a fascinating read... This University of Maryland survey seems to be very consistent with our anecdotal experiences as we roam the world conducing MBM workshops. Hat tip to Dennis Broughton for bringing it to our attention.
Bryan Caplan: The Myth of the Rational Voter: Why Democracies Choose Bad Policies
Peter L. Bernstein: Against the Gods: The Remarkable Story of Risk
Clayton M. Christensen: The Innovator's Solution: Creating and Sustaining Successful Growth
Bruce Caldwell: Hayek's Challenge : An Intellectual Biography of F.A. Hayek
« The 'new' organization | Main | Ford's Future »
The comments to this entry are closed.
It is interesting that people think that the free market system works best when coupled with stricter regulation. This stems from a mistrust in corporations to protect the interests of consumers and workers in the absence of government. However, no one seems to question if the opposite is actually the case.
Although limited government is necessary - for national security, services and the protection of the environment, the free markets do a far better job of punishing companies that don't play by the rules than the government.
Is the perception of mistrust really a result of the free market system or is it due to too much interference from the government which has created a network of special interests, lobbying and bureaucracy that give the incentives for companies to act in ways that undermine the free market system?
Posted by: Janelle Reese | 07 February 2006 at 11:14 AM
The thought that "free markets" will punish companies that don't play by the rules assumes that everyone agrees on the "rules". Governments create rules based on what society (the people that make up free markets) feels is right and wrong. U.S. lawmakers rarely pass proactive regulatory laws - that is, laws that anticipate and prevent wrongdoing. Instead, laws are typically passed in response to events so that they will, in the words of so many grandstanding lawmakers, "never happen again". The Sherman Act, WARN, Sarbanes-Oxley, etc. were passed *after* society decided that companies were doing things that were "wrong". The actions of a relatively few companies caused the mistrust that led to regulation for all.
Posted by: Kerry Parker | 07 February 2006 at 02:12 PM
Is the underground economy the ultimate free market? No taxes, no regulations, no government protections. Every man or woman for themselves. Largely uninsured, the underground economy does seem to be flourishing in areas like the drug trade, illegal workers congregating at Home Depot, home cleaners, foreign nannies, neighborhood auto repairs for cash and the like. Maybe the best argument for lowering taxes and lessening regulations is to allow other businesses to compete with the real free economy already in existence.
Posted by: Rich | 21 February 2006 at 09:59 PM
I understood the "rules" that Janelle talks about to be the sound rules of economics, not the rule of law. Those companies / industries that subscribe to protectionism, either through illegal trust, monopoly or government lobbying aren't playing by the fair rules of trade and will quickly die on the vine as compared with competitors who welcome competition, trade and change as part of the ongoing struggle to succeed. We don't need more laws on the books to maintain an ethical society, the free market has been doing that job for centuries. Companies like Enron don't invent new ways of "wrongdoing" that we now need to be protected from. Just as laws aren't passed *after* society begins to view something as wrong. The laws are put in place post-mortem so that there will be punishable consequences to the newly identified crime. To end my rant with a thought -- How much more swiftly and decisively would major public companies have responded to the Enron scandal had their "punishment" been one of investors pulling capital, rather than what we got from the Washington?
Posted by: John Cooke | 22 February 2006 at 02:03 PM
A good quote I read recently that is attributed to Benjamin Franklin: "No country has ever been ruined by trade."
Posted by: John Cooke | 28 June 2006 at 11:20 AM