As the regime of former Ukrainian president Viktor Yanukovych collapsed, protestors were found outside of One Hyde Park (which is a luxurious development in west London). These people were targeting the Ukraine's richest man known as Rinat Akhmetov, they chanted "discipline your pet".
The problematic state of the Ukraine has long been dominated by oligarchs. These wealthy individuals engage in a practice known as "rent seeking". Economists refer to this as a special type of money making which is made possible through political connections. This practice can range from outright graft to discourage competition, intentional lack of business regulation and transfers of public assets to firms at below market prices. Some people have made fortunes through this practice. This system reached its climax in America in the late 19th century. Antitrust rules broke monopolies apart such as John D. Rockefeller's Standard Oil. Since then the flow of bribes to senators in America has substantially shrank.
Although rent seeking isn't much of an issue anymore in the United States, it however still is in other countries. Turkey's prime minister has been engulfed with scandals involving construction firms, millions of Turks want him to be incriminated. India has also experienced capitalist corruption as well. Last year 182,000 public officials were punished for discipline and legal violations, which was an increase of 40,000 from 2011.
Even though capitalism based on rent seeking is unfair, it more importantly is bad for long term growth. Resources aren't properly allocated which leads to poor infrastructure, which is the case in India. Competition is also repressed, which can result in the overpricing of goods. Mexicans pay far above the market price for cell phones.
In my opinion, I think that governments need to be more diligent in regulating monopolies. They should promote honest competition and ensure that public asset sales are transparent. What would you do to prevent rent seeking?
http://www.economist.com/news/leaders/21598996-political-connections-have-made-many-people-hugely-rich-recent-years-crony-capitalism-may
This is a good article about the role of government in capitalism. I am usually one who thinks the government should not intervene in business, but I agree the government needs to intervene when it is unfair, and they are taking advantage of people. Because clearly, as stated above, they will take advantage of people all the time.
ReplyDeleteI think that government regulation on business are beneficial for the economy. Regardless of what the people think, the government's interest to benefit the country. However, there are cases when monopolies strive and the people suffer. This is such a case and I agree that the government should intervene and restrain monopolies within the country.
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