Government regulations

Many people dislike government regulation and prefer to leave matters to be sorted out by the free market. This is the approach that has led to asset bubbles and the collapse of the global financial system. It is the government stimulus and financial support that have led to the restoration of confidence in the market. However, this government actions are only temporary props to the system. The underlying root of the problem has not been solved.

Some people like the free market as it provides opportunities for innovation and initiative. But it also provides opportunity for cheating and exploitation, which are the fastest and easiest ways to accumulate wealth (especially in an environment where enforcement of business ethics is lax).

To have a more fair and stable market, we need regulations. The regulations have to be of the right type and not the wrong type. The regulations should not be rigid and cannot solve all the problems, but they should be able to solve more problems than create them. Leaving the free market to solve the problem will not work, as the profit motive and vested interest will find ways to take advantage of the situation.

There is a need for the state to provide more of the social services required by the people, such as education, health care, security, infrastructure, transport, housing and old age pension. The state does not need to employ people to run these services, but they can be outsourced to the private sector - but the fees, charges and standard of service should be regulated.

The state needs to provide up to a basic standard and leave the space for the higher income to buy additional services from the private market.  But the state benefits should form the benchmark to compare the services provided in the private market.

This is the approach adopted by many social democracies, such as those in Europe. They are able to provide a better quality of life for their people.

Tan Kin Lian