Government, Business, and Greed

What should be the proper relationship between government and the business sector? Government and business don’t have to be adversarial toward each other like many people think. On the other hand, they must not allow corrupt money to seduce them to collude and milk the people. If they work together in a responsible manner to promote the public good, the world will be a much better place.

If you want to do business around the world, where can you locate the rich, stable and orderly markets? You will find them in all the industrialized countries, big or small, ranging from capitalist (USA) to socialist (Scandinavia). The governments in those countries are stable, relatively less corrupt, and founded on laws. Their markets are organized, contract-based, and operate within reasonable laws. These countries seem to have achieved some kind of balance between excessive government control and reckless business profiteering.

Is this a mere coincidence or a necessary requirement for progress? For healthy development, government and business can find a way to cooperate to enhance both economic growth and welfare for society. A vibrant market requires a law-based government to safeguard it, and vice versa. If one is corrupted, the other will likely fail. The worst scenario is when government and business gang together to milk the public as occurring in many poor countries. Those countries are poor not because the people don’t know how to make money. They are poor because less than one percent of the population controls all of the country’s wealth. The rest have little opportunity to share and contribute to the economy. Do you have any idea how the richest people in a poor country live? They live like royalty, which may make the top one percent in a rich country jealous.

China and other emerging countries present some deviations from the rule due to their being in a transition period, or a so-called developing stage. Their dynamic markets mainly result from rapid industrialization and the creation of a huge middle class from the poor masses, rather than from a healthy balance of power between government and business. While their markets experience fast growth, their governments are under heavy pressure to reform and reorganize in order to manage the increasing sophistication and corruption of the market. Failing that, they will not be able to safeguard the orderly development of the economy.

Markets develop naturally from human instincts. A market begins with the fact that different people have different talents and needs. For instance, one person making hand tools wants to trade with another who raises pigs and chickens. Pretty soon all the buyers and sellers will converge in a convenient place called market. The market will grow bigger and more sophisticated as more people trade goods and services and make business deals.

Believe it or not, animals also conduct their own kind of business based on animal instincts. On land, they simply follow the law of the jungle where the strong eat the weak to fulfill their needs. In the ocean, the same applies where the big fish eat the small fish. This is survival of the fittest that nature intends. On the other hand, nature does not intend the destruction of the small and weak.  Why? The weak enable the strong to exist so that a natural balance is maintained. Then how can the small and weak survive? They develop all kinds of defense mechanism to protect their existence such as camouflage, repulsive odor, poisonous counter attack, and fast running ability. Look at the ants and small fish that seem to have little defense capability, they compensate for this disadvantage by reproducing profusely to increase the chances of survival for the species.

Despite no rules, the law of the jungle ensures a balance in nature. What guarantees this natural balance in the animal kingdom? It’s the absence of greed – a fundamental requirement that humans should learn if they want to maintain balance in the marketplace. To illustrate, a lion kills only one prey out of hunger. It will kill again when it gets hungry after a day or two. A lion never kills out of greed. On the contrary, humans will kill all the lions or elephants to make profit if there is no law to restrain them. So you see how easy for humans to upset the balance of nature when they try to satisfy their greed in the marketplace. Their greed and shortsightedness will likely cause the extinction of many animal species, and the depletion of many raw materials and resources on earth. By that time they will realize that they have no more support from nature for their own survival.

Due to the presence of insatiable greed, we need business rules and regulations for the market to function properly in human society. Market regulations, although cumbersome to some extent, serve the self-interests of all participants by protecting them from fraud, exploitation, and total elimination. Basically, market regulations should ensure fair play, promote competition, and enhance free flow of information. They should also protect consumers, workers, and the environment from being recklessly exploited. In short, market regulations prevent greed from getting out of control. Restrained greed stimulates business growth. Insatiable greed will bring down the entire economy.

Who should shoulder the responsibility to regulate the market? The government is the only legitimate body to make regulations and enforce them. The regulations should be written down as laws to serve the majority of the people rather than the powerful few who control a big share of the market already. Nevertheless, government is easily corrupted by money showered by the rich few who want an even bigger share of the pie. Should that occur, the government would become a tool, not an honest referee in the marketplace. Laws would be made to favor the small rich minority rather than the health of the market. This would be greed out of control for the evil purpose of milking the general public. Only conscience, compassion and responsibility make people cooperate for the public good. Therefore, how well can the government manage the market depends on how conscionable the public officials want to be.

New technologies are changing the market everyday, increasingly faster than before. If left to its own devices especially insatiable greed, the market tends to degenerate into a state of jungle law where the strong eat the weak. The consequence is the weakening and eventual disintegration of the middle class into a mass of angry poor with no upward mobility. A time will come when this angry mass will rise up and overthrow the entire system. This has happened before in many countries, notably the bloody Chinese communist revolution in 1949, and the Islamic revolution in Iran in 1979.

The rich businessmen have a choice to make. They can corrupt government officials with their money to continuously expand their gains in exchange for an eventual revolution. Alternatively, they can act with restraint to create a free and fair market for all where they and others benefit together for generations to come.

The people also have a choice. They can put up with the deterioration of the market and let themselves be continuously exploited. Alternatively, they can organize themselves into a strong political force that insists on serious reforms to make the market and the government work better.

December 2012

This entry was posted in 21st Century, Economics/Politics, Inspiration. Bookmark the permalink.

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