Tag Archives: government

How much Governments need to intervene in business?

The Economist.com debate of this week was about Governments making things worse by intervening to regulate business and financial risk. I am surprised by the result of the debate, with “interventionist” winning by a slight difference. 

In my view, we have not discoverd  yet any method better than Free-Market to regulate markets by the law of supply and demand. Yet, the governments have a fundamental role to make free-market work:
– ensure Competition
– ensure the rule of law
– intervene in key social areas, to guarantee minimum coverage for all: education4all, health4all, justice4all
– protect basic goods (including housing and medicines) from speculation
– invest and manage public infrastructure making them available for all: roads, railways..(and why not, Broadband Internet Access)

Free-market and healthy competition are the true engines for innovation. Successful innovation not only rewards the innovators, but the society overall. e.g Internet and Mobile Phones are affordable to the lower income population, thanks to private investment and intense competition driving prices down.

Excess of regulation can never stimulate innovation and progress in the long run, even if in the short term it seems to work.
e.g. Protectionism in the car industry, as Argentina or Brazil suffered and Malaysia still does, may seem as a good practice to protect domestic car-makers. The reality is the domestic car industry becomes uncompetitive, car prices rise and the lower-income population ends up not being able to afford a car in those countries.

I agree the financial market might need some extra regulations, as a credible banking system is key for the economy. But that should not be further than establishing mechanisms to protect the savings of their customers from a bankrupt.

Net Neutrality debate renewed

In US these days there has been a lot of renewed debate on Net Neutrality. See video below from Sen. Ted Kennedy for those not familiar with the issue

The fact that Comcast was throttling BitTorrent P2P traffic, triggered the debate whether Net Neutrality regulations would force the Service Provider not to slow down P2P traffic.Comcast argues, that even with Net neutrality laws, the only thing Comcast was doing was reasonable Network management.

“Comcast does not, has not, and will not block any Web sites or online applications, including peer-to-peer services, and no one has demonstrated otherwise,” spokeswoman Sena Fitzmaurice told CNET News.com. “We engage in reasonable network management to provide all of our customers with a good Internet experience, and we do so consistently with FCC policy.”

Should the Congress approve Net neutrality regulations, even if somehow those are interventionist on private sector business?

Wouldn’t these issues be better fixed by Market laws? The Government should just guarantee competition exists. e.g. users would move from Comcast to other Service Provider that does not throttle their traffic. As long as there is enough competition the open free Internet would survive, wouldn’t it?

I tend to agree with liberal thesis in favor of free market, but a la European, i.e. with exceptions in some areas where the System must intervene to secure equal opportunity for all: Justice, Health, Education, public infrastructures and, why not, Internet.

Internet is a cornerstone of our current society. Governments should take care of it.

Go for Net Neutrality, even if it upsets Service Providers.