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Is it possible to regulate greed?
By Venkatesh Subramanian on 13/2/2015
Most of us have never understood the reason for the great recession of 2008. But everyone feels its impact in terms of declining living standards and the uncertainty we face in the job markets and the overall economy.
The governments and regulators have been quickly able to control the contagion, but are still struggling to find long term solutions for preventing these kind of meltdowns. Their response so far has been to increase regulation and fines which ultimately is paid by all of us as consumers or build fortresses with tax payers money against any future meltdowns! Neither of it is a real long term solution and it is just a matter of time we will go back to our old ways of working that caused the meltdown in the first place. It is time to get to the root causes and solve them.
An analogy could be made to medieval times, where generally we were dominated by kings and rulers most of them with hubris, greed and arrogance and they embarked on wars and expansionist programs that only devastated many countries and peoples’ lives. And we found a brilliant answer to these solve this problem namely:
- democracy whereby all concerned people have a vote to elect their ruler rather than having one imposed upon them and periodic elections
- division of executive powers, where there are many checks and balances against the application of executive powers by use of both legislative and judicial oversight
And today’s world is characterised by large corporates whose economic activity exceeds that of many countries resembling the size and character of the medieval countries. While the markets are expected to chastise corporates for bad behaviours, it often fails when there is a monopoly or oligopoly situation.
Often these large corporates follow an expansionist approach to their business without any mindful consideration if such an expansion is necessary or not, much like a king invading his neighbour! And practically it is a no holds barred battle much like the wars of the middle ages. Recently we even find that a group of powerful people from different corporations are able to collude and rig markets that are quite large such as the worldwide Forex market.
Is such a democratic structure with clear division of executive powers possible in big corporations! Could it be the answer to future meltdowns! And let us not forget even though one of the achievements of democracy has been less wars, the biggest one of it all is the vast improvement democracy has brought to the lives of people and citizens.