Saturday, August 29, 2009

Free market and regulations

As the recent financial crisis has shown, free market needs some good regulations. These rules however must be placed to protect consumers against the market, not the market against competition. Let me explain; there are too many areas like insurance, real estate, and cable or telecom industries – among many others - where regulations are solidly in place to protect a monopoly and and continue price gauging at the expense of lower costs that should normally be provided by the normal law of free markets. These industries generally have an unfettered access to politicians and are well entrenched to defend their turf against open competition. These are regressive regulations. There are regulations and regulations; always remember that the ones needed are those that protect the consumer, not the industry!

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