Government regulation involves the use of the law, mandated by the state, to produce outcomes which might not otherwise occur, prevent outcomes which might otherwise occur, produce or prevent outcomes in different places to what might otherwise occur, or produce or prevent outcomes in different timescales than would otherwise occur. Regulations rarely produce complete outcomes or prevent outcomes completely but they generally do modify what would otherwise take place. Common examples of regulation include attempts to control market entries, prices, wages, pollution effects, employment for certain people in certain industries, standards of production for certain goods and services. Law (from the Old Norse lagu) in politics and jurisprudence, is a set of rules or norms of conduct which mandate, proscribe or permit specified relationships among people and organizations, intended to provide methods for ensuring the impartial treatment of such people, and provide punishments of/for those who do... A state is an organized political community occupying a definite territory, having an organized government, and possessing internal and external sovereignty. ... In economics and business, the price is the assigned numerical monetary value of a good, service or asset. ... A wage is the amount of money paid for some specified quantity of labour. ... Environmental Pollution is the release of harmful environmental contaminants, or the substances so released. ... Employment is a contract between two parties, one being the employer and the other being the employee. ... A good in economics is any physical object (natural or man-made) or service that, upon consumption, increases utility, and therefore can be sold at a price in a market. ... The service sector or the service industry, is one of the three main industrial categories of a developed economy, the others being the secondary industry (manufacturing and primary goods production such as agriculture), and primary industry (extraction such as mining and fishing). ...
Generally speaking regulations have costs for some and benefits for others. Efficient regulations may only be said to exist where on average their total benefits exceed their total costs.
If incentives for private market regulation are weak or if market participants lack the capabilities to pursue their interests effectively, then the introduction of governmentregulation may improve regulation.
We must be aware that governmentregulation unavoidably involves some element of moral hazard--if private market participants believe that government is protecting their interests, their own efforts to protect their interests will diminish to some degree.
Before evaluating the current regulation of derivatives in light of these considerations, it is quite useful to know something of the history of these instruments and their regulation.
Government mandated regulatory compliance costs are huge amounts: as much as all spending by state and local governments (education, police, welfare, etc.), or twice as much as social security and Medicare spending, or 3 times more than national defense.
The larger the section of the economy that is consumed by government spending, and the higher the regulatory costs mandated, the smaller the effective share of the economic pie remaining to the 'free-market private' sector.
Most agree the private sector (not the government sector) is the prime generator of long-term real median family incomes, living standards, real private savings and freedom.
Feeds |
Contact