Tuesday, June 27, 2017

OPEN MARKETS - The Challenge they are Presented


I should premise my comments here by saying "I am a believer" in the market economy. I am a believer because I have watched it work so often and so well, and, conversely, I've seen other modalities fail profoundly. The Market economy is an extension of the natural inclination for human beings, to interface with the environment to further their wellbeing and the wellbeing of their offspring.  We live at the apex of human existence in Canada right now, look closely at what has gotten us here – good governance, family, effort and community – most importantly though is human enterprise.  Early in Canada's development, the government decided it needed people and it said to Europeans – come to Canada and we will give you land. Thousands answered the call, from all walks of life, from all nationalities and together we built a country that is widely considered the best in the world. Certainly, there were mistakes made, but even the negatively affected by the European focus are better off here in Canada than most people the world over. Quibble if you will over details, be disgruntled if you must, but remember if you will, the privilege that being Canadian grants.

When I say "business" people affected by modernity and related institutions often grimace – they think exploitation and a number of other thoughts they've been conditioned to think. Business, enterprise, capitalism is people finding ways to extract a livelihood and prosperity from the earth. There is at times a long and winding road between the earth and the modern financial system; it behoves us all to remember the interconnection.

Every layer of abstraction between the populous and the earth is an opportunity for someone to profit. People use regulation, legislation – governance generally to better themselves – this reality can create distortion between the fruitful utilisation of the "earth" or the highest and best use of the earth absent government intervention relative to what actually transpires. There are other considerations at play certainly, however, the challenges associated with economy mostly stem from distortions facilitated by governance. The question is, does policy, governance, fairly represent the actual activity of people OR, does policy, governance, distort the activity of people or misdirect benefit. The goal of all policy should be to permit the human enterprise to occur absent coercion or distortion and to facilitate human enterprise generally. The "bum rap" "capitalism" has gotten is the perception of many in the populous that "enterprise" has corrupted governance in a manner that is detrimental to the populous. It is true the corporations have lobbied effectively for their interests and hence they have gained distorting advantage in some areas, as it is true, that large labour organisations have lobbied effectively for their interests. The fact that these interests have gained prominence in legislation is no fault of the parties, it is the fault of leadership (governance) for failing to develop systems that govern to the highest and best good, rather than, governance that falls prey to special interest.

Increasingly, the two primary and most represented actors affecting the political space – big business and big labour – are drawing society as a whole toward a regulatory regime that suits their interests and in doing so, they are constraining and or distorting the market for the third leg of the economy which consists of artisans, artists, small business, self-employed, farmers etc. The fragmented nature of the third leg of the economy precludes as concentrated of a lobbying effort relative to the other two legs of the economy. This phenomenon, if left unaddressed, will result in an ever increasing concentration of wealth and influence flowing to large corporations, labour unions and government. We need large corporations, we need government and we have labour unions (due to bad governance and greed on the part of employers). The question becomes, what is the right mix?  It is my ardent desire to raise the alarm, that in Canada we are increasingly becoming institutionalised, that there is a trend away from self-reliant and independent individuals of the sort the third leg of the economy produces. This is occurring because of the combination of mass media, mass markets, mass education, massive lobby efforts and the resulting regulatory realities have created so many barriers to entry that "independents" have a difficult time entering markets or participating in an effective way. 

It is a Faustian circumstance that has incumbent actors in the market effectively precluding other entrants due to incumbents being able to control access to the market via regulation.  It is a paradox that the thing best for the advancement of the human condition, is most resisted by economic players – the best thing being disruption and or creative destruction – there is a vibrancy that emerges from one operational model falling and new more effective one filling its place that moves the human condition forward rapidly.  In a vibrant economy, absorption of new technologies is rapid and attempted by several actors generating a circumstance that heuristics provide the best outcome; dramatically contrasted to government institutions where absorptive capacity is extremely limited and so advancement is stagnated. 

An unfettered market is very effective at delivering goods and services at reduced managerial cost. In Canada the CRTC controls communications and media, they constrain the supply of related goods and services in a number of different ways and as a result, in Canada, we pay more for media and have less variety of product and service. 
An open market means that there is an opportunity for non-incumbents to enter readily, that regulation is directed only at health and safety and never supply of product or services. In the new world in order for new technology to find its way to use, we need open markets – regulations for health and safety are a must – otherwise, the government needs to stay out of the way.  

We have attained an exceptional standard of living in the West, in Canada especially, we have the solutions. The Anglo / European economic complex has enjoyed immense success. There are improvements to be made to build out prosperity to the populous generally under the rubric of the Anglo / European economic complex. The core of the system, the engine, the market, works. The markets work because they are nothing more than people doing what people have always done with a common modality of interface – that being a currency. 

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