When raising children one must put rules and controls in place to keep them heading in the right direction and keep them safe.
At the same time, if they are ever to mature and become self-reliant, children must internalize right versus wrong, good versus bad into their own values that will over time help to shape their character. Values and character create a counter-balance to help channel free will into a constructive and positive path in life.
I have become convinced that, to a large degree, the same is true for markets.
We had a wonderful discussion last night in my MBA seminar about the inherent need for a counter-balance for free markets. The class read the Templeton Essays on free markets and moral character that I linked to a couple of weeks ago.
As we reflected on the current state of public policy and our economy through the lens of these essays, we saw that over history free markets have always needed a counter-balance.
The counter balance that has proven most effective over time -- our common morality that is disseminated through society and culture -- has waned in its influence over commerce during the past decades. The result has been markets run amuck scarred by ethical crisis after ethical crisis.
In its place the heavy hand of the governmental "parent" is stepping back in to restore order.
History also shows that government control and direction of economies never works very well over the long-term.
So here is our charge.
Entrepreneurs must not only focus on rebuilding our economy, but rebuilding our culture and moral fabric. Both must be in place for free markets to flourish over the long-term.
If we work on both of these pillars, we will be able to have the foundation in place for a new entrepreneurial renaissance. If we don't, the odds are than we will muddle under a socialistic burden on our economy for decades to come.
Do not focus your energy on fighting what is now being put in place. Be patient. If we rebuild our entrepreneurial economy and create truly good companies, society will once again look to us for leadership.
We have to restore their trust and confidence in us -- ee have to earn it back. Words will not make this happen -- only our actions.
Dr. Jeff,
This is exactly the reason why I reluctantly gave up the libertarian approach and became a conservative with libertarian leanings.
Without some form of counter balance, total individual liberty leads to anarchy.
As an illustration I point out that if you do away with all zoning restrictions and you also make prostitution both legal and unrestricted - Families who do not possess wealth would find it very difficult to find safe neighborhoods in which to raise their children.
The libertarian argues that the market seeing a need for family neighborhoods would provide the service. But the fact is that markets tend to pursue the short term gain over the building of the brand. Therefore if the supplier of family friendly housing found that he could make more money by taking a commission from the prostitution then, like Bernie Madoff is alleged to have done, the supplier would place his own interest ahead of those of the investors or of the clients.
Time and again, unregulated free markets have resulted in unhappy investors or clients.
I prefer freedom over regulation but recognize that the other individuals in a society must be protected from the overly selfish individual.
I can't say exactly when it will happen, but I truly believe entrepreneurism will be the one thing that pulls us out of this recession. The millions of people who've recently lost their job are, for the most part, going to try their hand at being an entrepreneur. The Internet has given us all the tools to start our own global enterprise. The "Next Big Thing" will be born out of one of these entrepreneurs.
James, I agree that individuals' needs require a strong counter-balance. However, we greed build in bureaucracies set up to "protect" individuals. We must be careful not to attribute only benevolence to government and governmental officials. They can get caught up in self-interests, as well. That is why ultimately I believe that ethics coming out of a strong culture historically proves to be the most effective counter-balance to the temptations of greed and power -- in business and in government.