The Role of Regulation

People fear the growing market power of successful economic actors may be used against them so they call for regulation.

Private actors in self defense hire lobbyist to interfere in the rule writing and the process of selecting the enforcers. (Regulatory Capture) The result is often rules with no teeth that impose compliance and record keeping costs which is burden that hurts the smaller firms the worst.

The larger firms realize that the lobbying network they build and paid for might as well be used for not just defense but offense against their competitors and their vendors. Regulations now becomes a room for businesses to impose costs on their competition. (Rent Seeking)

In all of this consumers are not protected but pay the bill through higher costs and a false sense of security that makes them more apt to fall for scams and fraud.

Individuals you fear with market power are just as fearsome if not more so with government power. It’s these powers in tandem that fuel the growth of each other. It’s diminishing of government power than makes accumulated market power weaker to competitive forces keep power in General more well distributed.

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