Regarding totalitarian regimes of the 1900s and unregulated Enron, WorldCom, etc, to what extent is it beneficial to regulate markets and industries?The marketplace in which this work occurs is...

Regarding totalitarian regimes of the 1900s and unregulated Enron, WorldCom, etc, to what extent is it beneficial to regulate markets and industries?

The marketplace in which this work occurs is crucial to the well-being of our society. Allowing power to be totally in the hands of the state has been disastrous, but allowing businesses and the capitalist market to be free of outside control can produce terrible effects as well.

Asked on by lillian01

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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Clearly, there is some benefit to having the government regulate the economy.  However, too much regulation is just as dangerous as not enough regulation.

In your question, you mention totalitarian regimes, but those are not really representative of what happens when there is too much government regulation.  A better example these days is a place like Greece or Spain where excessive government regulation has helped cause slow economic growth and (now) fiscal disaster.  In Greece, for example, there are laws specifying how much profit pharmacists must be allowed to make. There are laws designating how many people can enter certain lines of business.  These kinds of laws drive prices up for consumers and stifle the kinds of competition that can make for better products at lower prices.

Of course, laissez-faire capitalism is not without its faults.  You are right to mention Enron and World Com and you could also mention the problems that led to the financial crash of late 2008.  Completely laissez-faire economies would suffer from all sorts of problems -- things that existed in the early 1900s in the US like child labor and horrible working conditions.  They would also suffer from things such as air and water pollution as companies dumped wastes into rivers and allowed unlimited emissions into the air.

So governments must always balance.  They need to allow markets to be fairly free so that there can be innovation and economic growth.  But regulation can be somewhat beneficial because it can prevent the worst abuses of workers, the environment, etc. that come with a laissez-faire system.

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