This is something that should always be kept in mind in economic policy discussions: business groups are pro-BUSINESS, not pro-MARKET.
It is especially important to keep this in mind when we read news items such as this, in which several of Canada’s largest banks voice their opposition to the proposed TMX-LSE merger.
It is true that business groups will often make use the language of markets, and it is obviously in their interest to portray themselves as defenders of markets.
But they are a lobby group like any other, and cannot be relied upon to defend the general public interest.
This point is sometimes hard to see, especially since many business groups have the reputation of favouring such pro-market policies such as free trade. And so they do, but for precisely the wrong reason: as a way of increasing exports.
As I noted in an earlier Economy Lab post, the proper way to view exports is as a cost: the real benefits of freer trade are cheaper imports. Business groups have these priorities reversed -- see, for example, the auto sector’s position on freer trade with South Korea.
The primary purpose of financial markets is not to provide employment for finance professionals, and it is a fundamental mistake to conduct policy on that basis. The priority of the government should be to make sure that firms and investors have the best possible access to capital markets at the lowest possible cost. The interests of those who produce financial market services are at best a secondary consideration.
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