Government Intervention and Market-Oriented Principles

In public policy discourse, some individuals characterize free-market policies as “pro-business,” “favouring the powerful,” or other phrases intended to invoke an emotional or predetermined response. The truth, however, is often the opposite.

Generally, most people benefit from a freer economy. The paradox is that individual corporations have an incentive to lobby for government handouts, or particular regulations (and the larger the corporation, the easier the process becomes).

New Brunswick recently introduced a catastrophic drug coverage plan amounting to an individual manadate for every New Brunswick family, who must now purchase a drug plan, while Blue Cross will administer a subsidized opt-in to cover a substantial chunk of New Brunswickers. Although the plan is clearly a form of government intervention, it seems to serve Blue Cross quite well. In fact, Blue Cross may stand to gain from the arrangement quite substantially.

What company would oppose forcing people to buy their product by law? The same is true in New Brunswick for automobile insurance. At the risk of someone getting in an accident and not having insurance, there is an individual purchase mandate in New Brunswick for registered vehicle owners. I bet the automobile insurers do not mind this regulation at all!

At the federal level, companies like Chrysler perpetually ask the government for bailouts, even when they are not needed or justified. Chrysler can afford lawyers, lobbyists, and public relations experts for these endeavors and it is easy to imagine that it prefers government intervention. This narrative is also true in the regulatory sphere. Too often, companies will lobby for regulations that punish competitors, while benefiting themselves. Additionally, these arrangements disproportionately punish smaller firms, who may not have a sufficient economy of scale to compete with larger firms under a stringent regulatory regime. Consider food-labelling regulations–McDonald’s can easily afford to hire a dozen chemists to test the nutrient value of their menu, while the food truck run by your neighbor may not.

On the other hand, imagine if businesses actually had to survive market conditions and offer valuable services in order to remain viable. This is a pro-market position. This is what “market-oriented” means. I cannot imagine anything scarier-sounding to someone who is used to bending government laws in their favour.

Michael Craig is a 2013-2014 Atlantic Institute for Market Studies’ Student Fellow. The views expressed are the opinion of the author and not necessarily the Institute

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