Wednesday, October 28, 2009

Pro-Market vs. Pro-Business

Luigi Zingales posts a good analysis in an Investors Business Daily editorial. He discusses the advantages of a pro-market strategy over a pro-business one.

The Republican Party has to move from a pro-business strategy that defends the interests of existing companies to a pro- market strategy that fosters open competition and freedom of entry.

While the two agendas sometimes coincide, they are often at odds. Established firms are threatened by competition and frequently use their political muscle to restrict new entries into their industry, strengthening their positions but putting their customers at a disadvantage.

A pro-market strategy aims to encourage the best conditions for doing business, for everyone. Large banks benefit from trading derivatives (such as credit default swaps) over the counter, rather than in an organized exchange.
(H.T. Dad29.)

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