Political marketing of an established market

When politicians start talking about "introducing the market", we should be sharpened. Something special is happening.

Speculation - source: stavebni-formu.cz
Speculation - source: stavebni-formu.cz

A big thing is going on with the Slovak neighbors - politicians want to establish a market. From 2012, a new postal law will come into force, which is to "completely liberalize" the postal market and open it to competition.

Politicians are shrugging: we have established a market! Yes, we're just good. However, the whole beautiful facade is spoiled by one fundamental fact, which is (just by the way) pointed out at the end of one article of Slovak Sme.sk:

"The postal regulatory authority with regard to extension of its scope and obligations in the field of regulation of postal services and state supervision, expenditures will increase, mainly due to the increase in the number of employees. "

It is a beautiful example of what happens when politicians "introduce the market". They "introduce the market", but alas, how they will not like the "market".

Established market

The market cannot be "established". The market is an environment of voluntary cooperation. Any "forced" cooperation creates an environment that would not be "voluntary" - it creates relationships that would not otherwise arise. Thus, any regulated "market" cannot legitimately be "fully liberalized."

The market arises by itself, because voluntary co-operation arises only by itself and not by someone's regulation (then co-operation is forced). Therefore, if the state "introduces the market", it only creates new regulatory rules for forced cooperation someone with someone. Such "established market ”has nothing to do with the traditional market.

Political marketing

Politicians use market introduction in their marketing, if they want to reach more "liberal" voters. "We'll launch a market," they tell them. But what they won't tell them is, "It'll be according to our rules."

As already mentioned, the Slovak change in the provision of postal services is considered to be "full market liberalization" - how is it that the postal regulatory authority has new competencies? How come he has to hire new employees? How does it set the parameters of the services provided? Is this a liberalized market? No, that's a parody.

An established market (for example, Slovak post offices) cannot be effective. For example, the Slovak regulatory authority may set conditions for the quality, availability and regularity of services, including delivery times. It is as if the state specified the menus for the menu, the weight of the food, the opening hours and the time of preparation of the food.

For a few years, therefore, the established market will be "quasi-functioning" - then consumer complaints will go to the state (regulatory authority) and politicians will take advantage of the situation and "save the situation" by "that terrible dysfunctional free market" replaces some new "regulation". The result will be an even more regulated environment than before "market introduction". If there was a state monopoly at the beginning (Slovenská pošta), we will find it at the end cartel or monopoly again.

Excellence in finance

A perfect example of "political marketing established market ”is the financial sector.

The financial sector is one of the most regulated sectors in the world. In the current central banking system, it can never be a "liberal market", it is a real "established market".

State power (politicians) created a system of central banking. The central bank is the absolute monarch of the financial market.

This institution (state, gaining its power from state power) is almost out of the interest of the majority of the public for most of its existence. He works quietly and leaves most people in the illusion that there is real "competition" between banks, that credit rating agencies compete with each other, that it is their money and that the market works there.

The moment a major crisis arises over the regulation of the financial environment, politicians will immediately find the culprits - the bad market did it! That disgusting liberal environment! Yuck! Regulation must come to this, we must not leave profitable banks and speculators free!

He really did it bad market - but the bad market that politicians have just introduced. The "parody of the market" that they control (or made possible). The "parody of the market" that you just did they brought him where he is.

Many people will believe it. They did not see how the financial market was managed, that it was not a classic market, but an "established market". They they did not see that the crisis was not led by the invisible hand of the market, but by the clear hand of politics.

The result is gaining marketing points for politicians who will further regulate the established market. Such FD Roosevelt he is today considered one of the best presidents. Unfortunately. Few people know that his work laid the foundations for the current crisis.

Deregulation? Overregulation!

If you don't believe my words about the re-regulation of the financial sector, let's take a look at these numbers:

The crisis originated in the USA. In the US - in Washington - there is something called a "federal registry", it is a list of regulations in the local economy.

Between 1977 and 1980 under President Carter, the average number of new parties to the Federal Register was 72 844. Under Reagan, it dropped to 54 000. Under the first Bush, it rose to 59. Under Clinton, it rose to 71. Under Bush, it was (and is) a record 000.

The number of employees of government regulatory authorities has increased from 146 thousand (1980) to 238 thousand in 2007. It is grow by 63%. Expenditure on regulating the banking and financial sector almost tripled between 1980 and 2007 - rose from $ 725 million to $ 2.07 billion.

Higher regulation phase

An "established market" is nothing more than a more perfect form of state regulation. It doesn't work as well, it has the same flaws, but few blame the state, because few people notice the state. Therefore, politicians - who allow the whole system to be governed - can earn political points for quite some time when they criticize the "immorality of profitable capitalists." A lot of people (unfortunately) jump on it.

It is not possible to establish a market. It's an oxymoron. If the state introduces something, it forces someone to do something. However, this is not a classic market. The "established market" is thus the biggest threat to a voluntary business environment.

The only thing politicians can really do for our good is to enable the market to function effectively - to get rid of all forms of regulation. That is, also established markets, ie also central banks, ie also postal regulatory authorities…


  1. How advantageous would it be for Telecom in 2000? How would "competitive" IP telephony prevail if the lines belonged solely to Telecom? And would Telecom run more competitive services on them? What about gateways to other networks? What about nationwide connections? What about the "last mile" issue? Where RF transmissions were not applicable? Where it didn't work thanks to aggregation? Wi-fi began to appear in practice sometime between 2000 and 2003, and it did not become really widespread until the last, say, 5 years. Actually now 7, he is already 2011 😀
    I quite well remember the introduction of mobile phones into the more massive sometime since the second half of the 90s. But even that would not be so easy without the previous de-monopolization of de-regulation. Nothing is as it seems…
    And 11 years is a damn long time at TelCo.

  2. Cover - regulation trying to correct the previous regulation. A cartel was formed. Great, isn't it?

    If left to the free market, how advantageous would it be for telecom to keep so many lines, even though ADSL and landlines are falling at the expense of competing technologies today?

  3. Not that I am in favor of the Slovak procedure or the regulatory authority - I know nothing about the situation there - but sometimes even such a thing may not be as simple as it seems. A market can emerge if nothing prevents it. But if it is already caught up in the state monopoly, which should suddenly be privatized, you can't just give up - because the monopoly, even if originally built by the state, will remain.
    So it was with Czechoslovakia. Telecom - the authorities operated there in such a way as to * allow competition * (sic!). Since Telecom had a complete monopoly on land lines, it naturally did not want to allow competition on them after privatization - and I suspect that the CTU issued "regulations" on privatization during the privatization process (in the sense of leasing lines at not liquidation price).
    I would like to point out that there was nothing non-market about this (again, paradoxically and only at second glance) - as its infrastructure was built for "public" money of all citizens and lines, as well as other parts and legislation prevented parallel lines of competing connections.
    So they and those regulatory authorities can regulate the PRO free market - when they correct previous actions of the state. Nice, isn't it?

  4. Unfortunately, the tightening of the screws and the sponge will still clap for a long time….

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