I'm not an expert, but I believe, liberalism is about the notion that free, properly regulated and competitive markets, are the best way to create value, both for the consumer in particular and the economy in general, and to sustain growth and prosperity.
Regulation is the lubrication of the system. Markets which are too protected or too taxed or with complex regulations will not function properly, and those without any regulation may run wild.
The idea is that this free competitiveness and the ability to perform smooth and fair business will bring about innovation. And innovation is the key to achieve an edge towards your competitors, which ultimately results in benefits for the consumers and value created for the economy (consumers will be willing to spend the extra buck on the innovative product/service).
It all sounds nice and simple. But in free markets, after some time, you often get a phenomena called market consolidation. The least competitive stakeholders get bankrupt, the most competitive become desirable and are bought and merged creating more powerful corporations. The idea here is that a large business will run at lower costs because of economies of scale, and therefore be more competitive at global levels. Politicians like these big corporations because they provide large quantities of "stable" jobs.
What then happens is the market gets reduced to a few big corporations, often one monopolist, or just a few confortably settled in a nice cartel, and things stagnate. New businesses find it very difficult to enter that market because it becomes protected by the stakeholders already in. Then there is no drive to be innovative and no value is created, profits are maintained by keeping costs low and firing a lot of people, thus creating artificial growth (although they will claim that competition comes at global level, and they will spend a lot of money in publicity to try and look good...). Innovation will come only when the artificial growth cannot be sustained any longer.
Market consolidation may be a part of the game, but if regulation does not work properly, it may turn into a cancer. How many cancers is Europe suffering from right now? I'm no doctor either, but I suspect a few in banking and insurances, pharmaceuticals, telecommunications, car makers... It's the small, medium, dynamic businesses that push the economy, and regulation should facilitate them entering the markets.
What then happens is the market gets reduced to a few big corporations, often one monopolist, or just a few confortably settled in a nice cartel, and things stagnate. New businesses find it very difficult to enter that market because it becomes protected by the stakeholders already in. Then there is no drive to be innovative and no value is created, profits are maintained by keeping costs low and firing a lot of people, thus creating artificial growth (although they will claim that competition comes at global level, and they will spend a lot of money in publicity to try and look good...). Innovation will come only when the artificial growth cannot be sustained any longer.
Market consolidation may be a part of the game, but if regulation does not work properly, it may turn into a cancer. How many cancers is Europe suffering from right now? I'm no doctor either, but I suspect a few in banking and insurances, pharmaceuticals, telecommunications, car makers... It's the small, medium, dynamic businesses that push the economy, and regulation should facilitate them entering the markets.
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