Most would argue that the free-market system, the system of choice for most nations, has been the igniter of technological innovation, economic growth and the tool that has pulled people from poverty throughout the world.
However, the efficiency and viability of this system rests on three pillars: investment transparency, liquidity, and regulation. Such pillars can be compromised, however, when an elite few develop undue influence on the market, creating a risk for market failure and a climate of public anger and uncertainty. This invariably leads to a discussion as to the viability of the free-market, with alternative economic models of egalitarian theory proposed as anodyne to our pains.
Over the past twelve years or so, the free-market has witnessed three unique, yet interconnected, market failures created by lack of competition and exploitation of ill-conceived regulatory frameworks. The first illustration of just such a recent failure came to us just as we were entering the 21st century. Research analysts at many of the large investment banks were investigated by the SEC because of their curious habit of awarding high ratings to companies with a penchant for bankruptcy, cf. Enron and WorldCom. The findings from the investigation showed that many of these research analysts were paid not according to the quality and accuracy of their research, but rather upon their success in securing investment banking business for their employers. The best way to secure IB work, these analysts found, was to trade it for favorable ratings.