And then, what will corporates do?

Business Standard reports

A working group set up by the Reserve Bank of India (RBI) has recommended cross-subsidising of basic banking services to individuals and salvage the unrecovered costs through higher charges to corporates.

Nothing wrong at all for a business to cross subsidise. They do it all the time. In fact, you can say, businesses love to 'subsidize' shareholders, by extracting more price from those customers who are willing to pay more. But the question is, whether the direction should come from a central bank. If it increases the cost for corporates, would it not be passed over to their customers? So who really pays for unrecovered costs?

Business meets politics in Bellary

Business Standard writes

The opening of iron ore exports to the private sector in 1999 and the subsequent rise in global iron ore prices have spawned illegal mining and created huge wealth in Bellary district of Karnataka and turned it into a battleground for political parties.

Friedman once said he used to advice socialist countries to privatise, but later, he stressed more on building institutions that make free markets possible. Many equate being pro-business with pro-market. But, businessmen, especially the incumbents, have little incentives to support free markets. They would ideally want monopolies, and if a big restrictive government helps them achieve that they would support just that. Consumers gain from free markets and consumers have to demand that.

About

Clive Crook, writing in The Economist asked, "Who will speak up for international capitalism?", and went on to say, "Governments and businesses. What a pity that is. These supposed defenders of globalisation may do more to undermine support for it than the critics."

How so? I think one of the best answers came from Raghuram Rajan and Luigi Zingales, authors of Saving Capitalism from Capitalists - here. They said:

There is widespread belief that the most important tools of capitalism, free markets, do not benefit the common man, let alone the poor. We argue in this book that this belief is misplaced. The last three decades have shown that free markets are perhaps the most important tools for lifting the huddled masses out of poverty. But why then does the belief exist? We argue that it is because markets need rules to flourish. Rules are set by the politically powerful. Even in democracies, these do not always represent the common man. Instead, they often serve special interests such as dominant industrialists and well-connected bankers. The common belief is that these people want markets to be free. The truth, however, as we document in this book, is that in many countries the dominant business elites have created rules that prevent markets from becoming truly free, thus keeping their peoples mired in poverty.

This blog hopes to do something similar - document the attempts made by incumbents (who push for certain rules) and politicians (who impose them) to prevent markets from becoming truly free. Mostly from reports that appear in newspapers.