Essentially, though -- this is just "more regulation with extra steps."
Just pass the regulations and competition will likely find a way around it. Honestly, this to me is the biggest blind spot in all of "pro free market capitalism." The good flavor of capitalism is antifragile, You can make competition better precisely by making things HARDER on private companies, not easier. Stuff gets better because the weak die.
I'm probably asking for trouble, but... I've heard occasional support for this sort of thing (regulatory competion, I think) from free-market minded folks.
I'm sympathetic to a lot of market-liberal ideas, but never got this one.
Anyone care to make the better case that this kind of thing is good, in general? Why shouldn't it be ilegal.
I have no issue with this, although having to open up competition to companies regulated by external regulatory bodies does kind of highlight how regulatory capture has destroyed the ability of the free market to solve this issue internally.
I'm pretty sure what's being presented is the opposite situation, where private companies have an industry taken away, rather than handed to them.
That said, I'm not entirely sure how increased regulation makes it impossible to manage as long as the rest of the market is allowed to work. It's fairly obvious that both capitalism and socialism have very real downsides when unfettered. It's a balancing act.
Regulations increase the cost of entry, which means less competition, which means it hurts the free market. It really is as simple as that and you can most definitely group all regulations into the same category in this case.
But as you just pointed out, regulations are more likely to help big corporations by stifling competition, allowing them to snowball as is the natural consequence of competition free capitalism.
Regulation doesn’t mean it would be safer, just more bureaucratic. There are plenty of examples in the US of regulators failing to properly regulate like in Flint. Adding these regulations often benefits the capitalists more, as it raises the barrier of entry for smaller competitors and makes the market less competitive in the long run.
A point I don't see mentioned is that regulation isn't just slow and bureaucratic, and it isn't necessarily imposed on unwilling capitalists. It's often, as Stigler put it, "purchased by the industry". In other words, you regulate competitors out of business, or put up barriers to them even coming into existence.
Capitalism has the same problem all economic systems have, and that is a unidirectional drive toward more regulation. More regulation benefits entrenched companies and creates barriers to entry to new ones, who have increasingly bigger hurdles to overcome and a rapidly expanding list of ways they can be sued or regulated out of existence.
Regulation always increases; it never declines (except for small, select bits in little deregulation burps here and there). So long as a government endures, you can expect there will continue to be more and more laws and regulations, not fewer. Eventually the system ties itself up with too much red tape, like one of those old cartoons where the character becomes tangled in a ball of yarn.
Which is not to say total deregulation is a good thing. You need regulations in place to protect individuals, who often lack power and information, from suffering by decisions made by corporate super organisms with significant advantages in power and information.
The problem with the national movement toward ever more regulation is it enables the successful to do the same thing they do in every other socioeconomic model, which is to build firewalls aimed at preserving their class and wealth and keeping out competitors.
I say this as a diehard capitalist who sees it as the best economic model we've happened upon yet. Particularly in the early days of a well-regulated capitalist society, there's immense potential for anyone to reach the top. However, the longer the society continues, the more it stifles itself with labyrinthine laws, credentialism, certifications, and 10,000 rules to operate legally in any established industry (e.g., finance, automotive, utilities, etc.).
The tighter that regulations squeeze on free-enterprise, the more free-enterprise "fights back" by doing stuff like this. It's the path of least-resistance and the most-profit so of course it'll get exploited.
Regulations often have the effect of protecting entrenched corporate interests.
Government regulation hurting competition, and hurting the free market by "protecting corporate interests too much" is precisely what people are often complaining about.
Supporting the free market would instead be when you allow competition, and do not protect the entrenched corporations too much.
And regulation makes it harder for alternatives to exist. Why is this so hard for people to understand? If you want competition you need to reduced the cost of entry.
A lot of the regulations are there to protect existing players in the market as well. It seems that the market-based approach degrades when it comes into contact with democracy, probably because the equilibrium the market is trying to achieve is incompatible with our values.
The industry is already regulated, and companies are ignoring the regulations. This isn't even an approximation to a free market, let alone some ideal. Adding more regulations isn't going to help if they're not enforced.
One thing that people seem to skip in Capitalism is the idea that you can't have a tone of regulations. It appears the U.S. version of capitalism is continuously granting the "winners" in sectors with such strong regulations that it's limiting newcomers -- making it less competitive.
The current fashionable thing seems to be claiming that we need to become more socialistic. Which IMO is just an attempt to fix over regulation with more regulation... so down the rabbit hole we go.
The thing is, this regulation doesn't appear out of thin air. It came about because corporations had, and still have, so much power in the united states. In places where corporations are powerful, they will use that power to influence government. This is why Libertarian free market policies are pretty much as conceptually impossible as communism. When power is concentrated in the hands of few, they will gain economic power in the case of communism, and political power in the case of free market. It's not by chance that many are turning a blind eye to the root and noticing only the regulatory component of the problem as that is very beneficial to the corporations, and there's hardly anyone left to make arguments against them when they hold all the power.
Just pass the regulations and competition will likely find a way around it. Honestly, this to me is the biggest blind spot in all of "pro free market capitalism." The good flavor of capitalism is antifragile, You can make competition better precisely by making things HARDER on private companies, not easier. Stuff gets better because the weak die.
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