Government regulation of U.S. competitive markets and business

CSR

The economic system of the United States is based on the fundamental principle that the free market, with limited government intervention, is the most efficient economic system. Free markets do a better job of creating and distributing wealth than other economic systems. Yet, there still needs to be some government influence on the markets because only government can serve as a counterweight to business, to protect the interests of both consumers and investors. It is along these lines that most government regulation of business exists. There are a couple of key classes of laws that the U.S. has to further a balanced, fair and competitive economic system. The first of these are the antitrust laws, another class is securities laws and there is also a section of basic criminal law that deals with business as well. This paper will explore the legal environment in the context of promoting competitive markets.

Antitrust Legislation

The rise of monopolies in the late 19th century led to uncompetitive business practices on the part of companies that were in monopoly or near-monopoly positions. This gave rise to a particular government respond, antitrust legislation. The first such law was the Sherman Act of 1890, and this has been bolstered by several subsequent laws. The Federal Trade Commission Act in 1914 created the FTC, which is the enforcement body for anticompetitive practices. The FTC works with the Department of Justice in order to enforce the laws regarding monopoly and other uncompetitive abuses by businesses in dominant positions. Another major law in 1914 was the Clayton Act, which remains in force to this day (FTC, 2014). For example, mergers and acquisitions must be approved by the authorities to ensure that markets remain competitive both in terms of product/service markets and in regional areas as well. The preservation of competition is a benefit to free markets, despite the occasional need for government intervention to enforce the preservation of competition.

Other Laws

There are other laws within the bounds of criminal law that seek to enforce efficient, trustworthy and competitive markets. U.S. Code Chapter 47, for example, outlines different types of fraud that are illegal. Typically, there are a number of bodies that can investigate fraud, depending on the type of the fraud and its amount. The SEC might investigate a Ponzi scheme like Bernie Madoff, but other forms of fraud might be subject to criminal investigation at a more local level, or even the FBI level (Lenzner, 2008). Such laws seek to ensure that when firms compete, they do so fairly, and do not compete by seeking to destroy their competition through illegal means.

Analysis

In general, these laws have created a robust, competitive market economy in the United States. There are legal issues that emerge every day. This does not mean that the system is broken; in fact it means the opposite. The system works, and when companies are found to be doing things illegal, action is taken to stop them, prevent further action and provide remedy to those who have been wronged. The United States has the world's largest capital markets, the largest economy and is consistently rated as one of the best countries in the world in which to do business.

All of these things are possible because of the laws and the robust system of enforcement that ensures that firms are competing fairly on their own skills and merits. This forces companies to succeed through things like innovation, and that has made the U.S. economy the most innovative in the world. There is little doubt that the legal environment is one of the major strengths in American business. It actually makes little sense when you hear people who are ostensibly "pro-business" promoting the idea that regulation is bad for markets. There is a point where regulation serves no purpose and is therefore wasteful, but for the most part the regulatory system in the U.S. is efficient, clear and logical, and therefore does far more good than harm. The proof is in the results -- the world's biggest and most innovative economy with the strongest and most efficient capital markets. The reverse is a country that has no protections to ensure a competitive market. Some of the examples of this are the robust, booming economies of North Korea, Cuba and Somalia. So, yes, laws to ensure fair, free and competitive markets perform their jobs well and have been implemented very well in the U.S.