Interesting example of a free market solution to regulation.

[surfingthoughts]

(This is my first post  )

 

Deregulation/non state enforced regulation is one of the many beauties of anarchism however it is a common misconception that sate enforced regulations are a necessary evil to protect vulnerable customers/small businesses. I was speaking to my dad (who runs a small but successful insurance brokers) about deregulation and he gave me quite a wonderful example of how the free market solved a potentially serious problem.

 

Scenario:

A insurance broker who is a con man and has the aim of taking the money from the clients telling them they are insured and then runs off with the money. Thus the insurance companies would not have been paid, thus the clients would have no insurance and a empty pocket.

 

With regulations:

A rule book has been put in place and is enforced by law, this rule book is of considerable length and written by lawyers who although have an in depth understanding of law understand very little in regards to how businesses in the insurance industry operate. The cost of this regulation to the government is recouped via the insurance brokers themselves. This rule book among other things limits the type of account that the clients money can be put in before transferring it to the insurance company making it harder to steal. The problem with this regulation like many others is there are loop holes or at least ways of getting round them if you put your mind to it and they are costly to enforce. The way I have worded it sounds as if this regulation is easy to follow but I can assure you it is not, it is time consuming slowing the whole process down considerably and legal advice was required when the regulation was implemented. Regulators will do random checks which are disruptive and time consuming.

 

Without regulations:

The insurance companies would cover the clients for the insurance they had payed the crooked broker free of charge. The insurance companies would try and get the money back from the crooked broker but this was quite often not possible. The insurance companies did this to stop the market crashing in local areas and causing a ripple affects. It was in their interest to keep the market that they rely on stable... The free market is quite often self maintaining in B2B as it is in the interest of the big companies t to keep the small companies that they rely on in good health.

 

If you have any interesting examples/links of before and after regulation please share them here. If you are puzzled about the free market alternatives to a given regulation we could also discuss that here. Sorry if this was a bit wordy  I hope someone found this of interest.

 

 

[Alan C.]

Free-market regulation of computers and electronics.

[surfingthoughts]

That's a good example of a current market working quite well plus yet another vid for me to add to my watch list.

 

I was looking more for current regulations that are enforced and either what happened before or alternatives, sorry if I wasn't clear my first post was very wordy.