Myth of self-regulation

Jack Gibson, Memphis

I believe the writer of the April 12 letter “Free enterprise works” has come to a very shaky conclusion when he writes: “The highest level of prosperity occurs in a free enterprise system where there is limited government.” In fact, the countries with the highest levels of prosperity have strong central governments, while countries with very limited and inefficient governments are mired in poverty. I name Norway and Switzerland in the first group and Haiti, Bangladesh, Cambodia and Chad in the second. This information is based on a world ranking of GDP per capita shown in “The Economist: Pocket World Figures,” 2013 edition.

For our free enterprise system to work its economic magic, several things are required: There must be meaningful competition in every industry, prices for goods and services must be permitted to float with changes in supply and demand, and we must be careful not to erect barriers to the entry of new businesses. This requires our vigilance and, yes, regulations, if we truly want our free enterprise system to produce continuing prosperity. Self-regulation does not work well. The best analogy I can think of is playing basketball without rules or without referees; it would be a disaster.

I suspect countries with more limited governments are rife with bribery, favoritism and government protection of inefficient industries, the very things that stifle competition.