Those who believe in true laissez-faire are met with incredulity from skeptics, critics, and naysayers when they confront them with the assertion that consumers and investors can be properly protected without the presence of the long and ever-lengthening arm of the state and its endless interventions and central planning mandates. Here are a few reasons why the unbelievers are mistaken.
1. Regulation Is a Barrier to Entry
Many well-intentioned people believe that regulations ensure product quality and safe industry practices. However, what regulations mostly do is protect older, well-established, and oftentimes stagnating companies from fierce and unpredictable competition from new, young, energetic, forward-thinking upstarts and rivals. This is one reason big businesses support regulation, they just never acknowledge it. Consumers are last on the list of those that benefit from regulation.
2. Regulatory Capture
Many observers of and commentators on political economy complain that regulatory agencies inevitably become “captured” by the very industry they were purportedly designed to regulate. That’s no surprise since otherwise private sector companies that no longer can thrive in a freely competitive marketplace have a natural incentive to engage in rent-seeking. In fact, many regulatory agencies were designed by big business interests. Case in point: the US Federal Reserve.
3. Consumers Already Regulate the Market
Consumers love them some Amazon and Netflix and because they do, it’s impossible in America these days to walk into a Walden Books store, a Radio Shack, a Tower Records store, a Sam Goody’s music store or a Blockbuster video store. The United States Postal Service would have suffered the same fate decades ago, were it not for government-provided monopoly privilege and protection. But some might ask, without the Postal Service, how would I get my mail? Who provides your free email? Some company in the private sector, that’s who.