SMART LEGISLATION
Clearly, the policy ideas under discussion entail market regulation. Some conventional libertarians might intervene and proclaim this will asphyxiate industriousness and the invisible hand of the market will not work its magic anymore.
However, since the early 20th Century up to today's time, the market has been anything else but free. Corporations and individuals have benefited immensely from regulation and governmental planning, hence the validity of the argument stands to question.
In addition, environmental damages that reduce future ecosystem services are so far hardly accounted for in economic terms. As the burden is currently shifted to another time or space, the market is inherently unsustainable and will destroy itself sooner or later – an event that not even the most die-hard liberal would strive for.
Therefore, to ensure longevity of society and economy, regulation is necessary and welcome.
A few examples of past regulations are presented that sheds light on current practices.
Examples of market regulation
⦁ Standardization of utilities and products
⦁ Subsidies of all forms (tax cuts, fixed grid feed tariffs, direct subsidies like in agriculture etc.)
⦁ Nationalistic protectionism of industries (e.g. Airbus vs. Boing, steel industry)
⦁ Counterfeit (patent legally unbinding, rise of Germany end of 19th and China end of 20th century)
⦁ General protectionism, import tariffs
⦁ Military and defence spending
⦁ Extensive regulation and safety precautions (heavily regulated industries making it difficult for newer smaller companies)
⦁ Price fixing between providers of the same product or service
⦁ Private capitalization of innovations created from public R&D funds spending (e.g. GPS, internet, touch screens)
⦁ Tax heavens and internal transfer price abuse
⦁ Listening to shareholders with potentially short-term interest (e.g. reduce cost by acquisitions and increase dividends instead of R&D spending as instructed by Morgan Stanley for pharmaceuticals companies)
⦁ Creation of trusts and cartels
⦁ Agreed distribution of operational areas (e.g. German energy market, British water market)
⦁ War on drugs: criminalization of certain commodities leading to increased counter action spending, criminal and untaxed revenue activity and cartel structures for these distribution channels
⦁ Politicians receiving high-paid, low responsibility jobs after their term as promised by industry
⦁ Prohibition of child labour, obligatory schooling
NB: In case of further interest, the book „kicking away the ladder“ reveals how today’s developed countries have used (the lack of) free trade policies to rise to the top.