Title: Six Arguments Against Government Regulations - Capitalism
Headings: Six Arguments Against Government Regulations
Six Arguments Against Government Regulations
What are some of the economic arguments against government regulation?
1) Government regulations are a hidden tax on the market
2) Government regulations dull competitive market forces by erecting barriers to entry and forcing marginal firms out of the market
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3) Government regulations are a form of special interest protection and rent-seeking by the business community
4) Government regulations are redundant, since the free market is self-regulating
5) Government regulations threaten the rule of law and violate property rights, often subverting market forces to the arbitrary whims of bureaucratic decision makers
6) Government regulations are rarely subject to thorough cost-benefit analysis (CBA)
So, for all these reasons, government regulations pose serious threats from undetected costs and adverse consequences.
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Content: they can improve their products, lower their costs, become more efficient, and compete head to head with their new rivals. Or, they can run to the government seeking protection from competition (either foreign or domestic) by advocating regulations that create barriers to entry, making it more difficult for new rivals to compete on a level playing field. Examples of the latter tactic abound, including but not limited to product safety regulations, pricing disclosure regulations, mandatory government inspection of products and services, tariff schedules and a variety of import restrictions, and occupational licensing laws in increasingly more professions (see here ). Indeed, managers and owners in existing business firms are often called upon by government officials as “experts” asked to help craft the regulations that will govern their industry, and then grandfathered into these regulations that will apply immediately to new incoming firms. Such regulations are often marketed and sold to consumers and voters as “consumer protection” against fraudulent or sub-par and unscrupulous businesses. However, the deeper motivation is in exploiting regulation as a form of “business protection” from competition, limiting entry and insulating existing providers from threats to their market share and pricing power. The recent restrictions and challenges faced by firms like Uber, Lyft, Airbnb, and countless professional services occupations from veterinarians to morticians to interior designers to manicurists and hair-braiding salons, are all testament to rent-seeking regulatory barriers to entry that favor existing firms while harming consumers, new rivals, and the overall efficiency of the marketplace. A telling piece of evidence in this argument is that new regulations rarely if ever originate with consumers or consumer groups seeking protection from faulty products or fraudulent services. Instead and inevitably, the s upport for regulations comes almost exclusively from the business community, and especially from existing firms hoping to impose entry barriers on potential rivals. 4) Government regulations are redundant, since the free market is self-regulating
Some alarmed readers may now be asking, “If government regulations were repealed, or if existing government regulations merely suppress competition with few if any benefits to consumers, then who or what will protect consumers in the marketplace other than the government?”