3. Free Market Free Riders
The “free” in free markets is frequently not the good kind of free. It’s an enormous error to accept that freer, less regulated markets are always better markets. Comparisons with regulations in sports and the legal arena can help us draw useful analogies. Whatever the free-market faithful preach, we must look at how they operate in the real world. All too often, free-marketeers seek a free ride, and try to free themselves from bearing the consequences and costs of their enterprises. Regulations are the only means of countering these unproductive, unethical freedoms.
Everyone appreciates the value of regulating freeness in sports. It's understood that the rules shouldn't favor the strongest teams or players, especially not at the expense of the sport as a whole. The same is true of markets. Regulations must protect the health of the whole, not favor the narrow interests of the strongest. Indeed, in sports we know that it can make sense for the rules to favor the weakest at the expense of the strongest.
The logic of liberty requires agreed-upon—and enforced—limits on free people. No society is possible without laws to limit individual freedoms where they conflict with each other or with civic order. This is no less true for markets. In fact, there are good reasons to make sure that free markets are never as free as free people. Markets can, and do, much more harm than individuals ever could. They coordinate the actions of billions, and we unbridle them at our collective peril.
There are three kinds of regulation resisters: the principled, the easier-for-me, and the exploiters.
Those who resist on principle believe everyone should be as free as possible. But nobody would want drivers to be free to choose which side of the road to drive on. Some limits, like rules of the road, enhance effective freedoms and improve safety and efficiency. And freedom, like every other ideal principle when it comes into contact with reality, has to be balanced against other goals.
The easier-for-me resisters just want to avoid the inconveniences of regulation. But they are often blind to their own fallibility. Regulations can protect them from their own mistakes, as well as protect the system and all others who need it.
Exploiters actively seek to take advantage of lax rules and want weak enforcement. If they think they can pad profits by not processing their waste or having their accountants cook the books, they’ll do it. Regulations help manage these exploiters, just as laws help us manage would-be criminals. Their whole point is to protect us, as much as possible, from those who are tempted to act badly.
A particularly perilous example of resistance to regulations is put into a concerning context by a posting on the Forbes website "Financial Execs Confess: Sure, We Lie and Cheat.” It cites a survey of 500 senior executives, 24% of whom said success requires that "rules may have to be broken” and reported that “39% found it likely that their competitors had engaged in illegal or unethical activity.” To ask such an industry how it would like to be regulated is like consulting foxes on the design of rules for guarding hen houses. Even if many on Wall Street aren’t exploiting resisters, the easier-on-me position taken by their colleagues enables others who are.
By all means, we should roll back regulations that don't meet social goals, but by no means at the cost of making conditions easier for the unscrupulous and the fallible.
As with political freedoms, the price of market freedoms must be eternal vigilance. Markets are like fires. If not carefully managed within safe limits, they’ll consume everything in their path. But carefully controlled and put to good use, they’re invaluable.
Everyone appreciates the value of regulating freeness in sports. It's understood that the rules shouldn't favor the strongest teams or players, especially not at the expense of the sport as a whole. The same is true of markets. Regulations must protect the health of the whole, not favor the narrow interests of the strongest. Indeed, in sports we know that it can make sense for the rules to favor the weakest at the expense of the strongest.
The logic of liberty requires agreed-upon—and enforced—limits on free people. No society is possible without laws to limit individual freedoms where they conflict with each other or with civic order. This is no less true for markets. In fact, there are good reasons to make sure that free markets are never as free as free people. Markets can, and do, much more harm than individuals ever could. They coordinate the actions of billions, and we unbridle them at our collective peril.
There are three kinds of regulation resisters: the principled, the easier-for-me, and the exploiters.
Those who resist on principle believe everyone should be as free as possible. But nobody would want drivers to be free to choose which side of the road to drive on. Some limits, like rules of the road, enhance effective freedoms and improve safety and efficiency. And freedom, like every other ideal principle when it comes into contact with reality, has to be balanced against other goals.
The easier-for-me resisters just want to avoid the inconveniences of regulation. But they are often blind to their own fallibility. Regulations can protect them from their own mistakes, as well as protect the system and all others who need it.
Exploiters actively seek to take advantage of lax rules and want weak enforcement. If they think they can pad profits by not processing their waste or having their accountants cook the books, they’ll do it. Regulations help manage these exploiters, just as laws help us manage would-be criminals. Their whole point is to protect us, as much as possible, from those who are tempted to act badly.
A particularly perilous example of resistance to regulations is put into a concerning context by a posting on the Forbes website "Financial Execs Confess: Sure, We Lie and Cheat.” It cites a survey of 500 senior executives, 24% of whom said success requires that "rules may have to be broken” and reported that “39% found it likely that their competitors had engaged in illegal or unethical activity.” To ask such an industry how it would like to be regulated is like consulting foxes on the design of rules for guarding hen houses. Even if many on Wall Street aren’t exploiting resisters, the easier-on-me position taken by their colleagues enables others who are.
By all means, we should roll back regulations that don't meet social goals, but by no means at the cost of making conditions easier for the unscrupulous and the fallible.
As with political freedoms, the price of market freedoms must be eternal vigilance. Markets are like fires. If not carefully managed within safe limits, they’ll consume everything in their path. But carefully controlled and put to good use, they’re invaluable.