Scott Sumner  

Why most regulations are harmful

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One of the most basic ideas in economics is that the vast majority of regulations are harmful. Here's a simple example. Suppose banks charged $2 to use ATMs. Then suppose the government passed a "pro-consumer' law banning those sorts of fees. What would happen? Economic theory suggests the law would hurt consumers, and yet I'd guess that 97.34% of consumers do not know this fact. Here's why a ban on fees hurts consumers:

Banks will see this as a cost increase, and pass the cost on to consumers in other ways. Can I be sure this will occur? No, but it's very likely. Suppose I told you that Congress passed a 10-cent increase in the gas tax. What would you expect to happen to gas prices at the pump? Most people would expect a 10-cent increase. In fact, the oil industry is perhaps the industry where taxes are least likely to be passed on to consumers. That's because the supply of oil is less elastic that the supply of almost any other good, including banking services. So if you think gas taxes are passed on to consumers, then you should be even more certain that I'm right about the elimination of bank fees being passed on to consumers in other ways, such as fees on deposits, or lower interest rates on deposits.

OK, but so far this is a wash. If consumers pay less in one place and more in others, does the regulation actually hurt consumers? Yes it does, because it also hurts bank efficiency. Eliminating ATM fees will reduce the profit maximizing number of ATMs, which will make banks less efficient. Since tellers cost more than ATMs, the cost increase passed on to consumers will be larger than the saving from ATMs.

This logic applies to most other regulations, except those aimed at special market failures, such as monopoly power, externalities, and information asymmetry. None of those market failures apply in the ATM case.

Nor do they apply to the new regulations on overtime, discussed recently by David Henderson. Nor do they apply to the vast majority of regulations aimed at health, safety, worker benefits and 1000 other aspects of our daily lives. I won't say they never apply, there are probably a few areas where OSHA understands health risks better than workers and companies, but there is no statistical evidence that OSHA has actually improved worker safety. Nor do externality or information asymmetry arguments justify banning smoking in restaurants.

This used to be a basic idea that was known to all good economists, like the idea that fiscal stimulus is not needed when the central bank is targeting inflation, or that minimum wages are a bad idea, or that free trade with China helps America, or that trade deficits are not bad things, or that fiscal stimulus doesn't reduce budget deficits by triggering faster growth. Unfortunately, much of the core of economic theory is rapidly being forgotten. Here is Paul Krugman:

The Obama administration issued new guidelines on overtime pay, which will benefit an estimated 12.5 million workers.
This is a real head-scratcher. Basic economic theory predicts that this rule will hurt workers, for exactly the same reason that a ban on fees at ATMs would hurt bank consumers. And that's probably true even if higher minimum wage rates help workers. Overtime rules don't cap total worker compensation, which is set by the market. Reduce worker efficiency (as this regulation does) and you will reduce total compensation.

I didn't write this post to bash the overtime rules; others like Don Boudreaux have done that far more effectively. I'm writing this post to remind people that economic theory suggests that the vast majority of regulations are counterproductive, and many actually hurt the people they are intended to help. I'd guess that over 90% are not justified, including almost all occupational barriers to entry, trade restrictions, health and safety regulations, tax rules, employer mandates, landlord mandates, etc., etc.

What regulations are justified? Primarily environmental mandates (or taxes), and perhaps a few anti-trust rules. One can also justify some regulations, like minimum capital requirements for banks, on "second best grounds", due to deposit insurance.

We'd be better off passing a law sun-setting all regs, and the entire Federal tax code, in 2025. Then give Congress the next 9 years to set about re-passing all the regs and taxes that actually make sense.


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CATEGORIES: Labor Market , Regulation




COMMENTS (45 to date)
Harold Cockerill writes:

The Feds have another layer of regulation in the pipeline in the form of the "Affirmatively Furthering Fair Housing" rules working their way through congress now. This law gives HUD the power to basically rezone your town if they don't like the racial or income makeup.

Got to knock down those property rights to make sure the world is fair. What could go wrong?

Dennis writes:

Scott, are you a fan of the System Shock video games? Because 97.34% sounded both oddly specific and oddly familiar: https://en.wikiquote.org/wiki/System_Shock#SHODAN_2 . I put the odds of you randomly picking 97.34% at about 1 in 500, which is also about where I put the odds of you playing (one of the best) computer games in the 1990s.

Nicholas Weininger writes:

My guess is that most proponents of these regulations would say, essentially, that they are anti-monopoly measures, because in their mental model of the economy essentially every business is a de facto monopolist or cartel member. Thus many "pro-consumer" regulations rest on the implicit assumption that taking one's business elsewhere is simply not an option, and likewise "pro-worker" regulations on the assumption that every employer has an essentially fixed set of employees who cannot find a decent job anywhere else. There's a motte-and-bailey tactic at work too: because perfect competition does not obtain in real markets, people erroneously conclude that then there must be enough monopoly power to justify regulation.

Mike W writes:

Economic theory suggests the law would hurt consumers, and yet I'd guess that 97.34% of consumers do not know this fact.

Do they "not know" or do they not believe that it is true? I think most people understand the concept of cost increases being passed through to consumers (maybe I'm wrong and they don't) and, if so, it is not a case of "not knowing".

So maybe the public does not believe that the regulations will "hurt" them...i.e., the cost will be borne by someone else or the benefit is greater than the cost.

In any case, if 97.34% of the population do not agree with economic theory...who's wrong?

ChrisA writes:

Nicholas - that is a good observation. There is a very simple economic model that many people have that a business is simply a way of generating risk free rent to its owners, and the only reason that the owners are not sharing their rent is because of selfishness of the owner. It's the same belief that results in the thinking that if there is lower pay for women or racial minorities is due to the racial bias of the owner and not because the employees are less productive. This model assumes competition does not exist in any meaningful way for a business.

Of course ironically, with the bank bail outs of the GFC, it appears that some businesses are indeed able to provide risk free rent, since if they start to lose money, the government provides more. With that context, why not share the rent more widely?

Mr. Dathers writes:

[Comment removed. Please consult our comment policies and check your email for explanation.--Econlib Ed.]

Richard writes:

"Banks will see this as a cost increase."

Won't they more accurately see it as a revenue decrease? And are those two really the same in terms of a profit-seeking firm's most likely response?

MikeP writes:

Another example is airline prices. I celebrate every time a new fee comes up because I know that (a) people who don't want what the fee pays for won't have to pay for it and (b) the service is more economically efficient overall, improving competitiveness and maximizing surplus.

The vast majority of people disagree and think they are being gouged by evil airline corporations.

When the government adds regulation in an attempt to improve service -- e.g., disallowing planes from waiting on the tarmac more than a certain time -- they are forcing a less efficient outcome and eliminating dimensions of competitiveness (e.g., refunds per hour of waiting) and amounts of surplus (everyone loses when a flight is cancelled due to losing a takeoff slot).

Scott Sumner writes:

Harold, After all, the Federal government's plan to encourage banks to make more housing loans worked well. What could go wrong with this!

Dennis, I'm afraid I know nothing about video games. Does that number have a special meaning?

Nicholas, You said:

"My guess is that most proponents of these regulations would say, essentially, that they are anti-monopoly measures, because in their mental model of the economy essentially every business is a de facto monopolist or cartel member."

So they don't think that gas taxes lead to higher gas prices? Why wouldn't a monopoly bank make up for the lost revenue by charging it's customers more elsewhere?

I understand that this is not your view that you are describing, but I just can't fathom what that mental model looks like.

Mike, You said:

"In any case, if 97.34% of the population do not agree with economic theory...who's wrong?"

I suppose you could say the same about any scientic theory not well understood by the public, including the theory of relativity. I will say that it's one thing to understand the theory and reject it, and another to not even be aware of the theory. Try asking someone why economists think ATM fees help bank customers. If they can't explain the idea, they are not well enough informed to reject it.

Richard, I was thinking in terms of it being more costly to provide cash disbursement services to bank customers, but I see your point. In any case, the analysis is the same whatever you call it. If we assume a profit maximizing firm produces where MR equals MC, then the impact on quantity (and hence price) should be the same either way.

Jon Murphy writes:

@Mike W:

I think most people understand the concept of cost increases being passed through to consumers (maybe I'm wrong and they don't) and, if so, it is not a case of "not knowing".

I don't think most people would see the elimination of bank fees as a cost increase. So it would be a case of not knowing.

Jared writes:

Obviously businesses are going to have to make some kind of trade off but wouldn't we expect hours to be cut more than wages? Many restaurants require their managers to work a certain amount of hours, even when it's dead. By cutting hours on the margin, I don't think as much productivity will be lost as expected.

Airman Spry Shark writes:
We'd be better off passing a law sun-setting all regs, and the entire Federal tax code, in 2025. Then give Congress the next 9 years to set about re-passing all the regs and taxes that actually make sense.
Why make it a one-off? Better to enact an Amendment stating that all Acts of Congress sunset 10 years after passage (so all laws would need to be continuously renewed to remain on the books).

Perhaps treaties (which have a sort of super-law status in the Constitution) become inactive 20 years after their last ratification.

Anonymous writes:

@Scott

What do you make of the claim I see some make, perhaps implicitly, along these lines:

"Yes, when markets are allowed to operate freely, prices will be set by supply and demand. But those aren't in any sense the 'correct' price. They don't have any normative value. There's no reason to expect that the government couldn't improve things by setting the price higher or lower, or placing this or that extra requirement on the buyer or seller.

Yes, regulations that raise a price will cause surpluses; regulations that lower a price will cause shortages. So what? We have no reason to assume that the optimal price for any good is the one at which quantity supplied equals quantity demanded. The reason economists tend to dislike regulations in general is because they don't just study markets, they like markets. They think that markets are conceptually neat - which they are - but this causes them to be biased, treating market-produced outcomes as intrinsically better than outcomes that involve intervening in markets."

I don't know enough to evaluate this, but it seems at least a plausible argument.

Lorenzo from Oz writes:

Laws are embedded social bargains; massively reducing the value of social bargaining through the political apparatus may not be an unalloyed good idea.

Sunsetting all regulations issues by government agencies, however, has a much stronger case. (Not least because they are not avenues for social bargaining one wants to encourage.)

Rajat writes:

Agree with Lorenzo. What about gun laws, Scott? It may be too late to seek to eliminate guns in the US now, but I find it hard to believe unrestrained access to guns contributes to a good society. Then there are a whole bunch of regulations targetted at habit-changing - things like car seatbelt requirements and many anti-smoking regs - which seem worthwhile in the longer run. I accept they can be pretty intrusive, but in cases where the evidence is strong, it seems a case could be made. Of course, many of these could be sunsetted, so that after a time period when one might expect that most people's habits have changed, the regs could be dropped.

Mike W writes:

@Jon Murphy

I don't think most people would see the elimination of bank fees as a cost increase. So it would be a case of not knowing.

As Richard pointed out, "Won't they more accurately see it as a revenue decrease?"

With an intervention of regulation we'd most likely be talking about a bank fee reduction not an "elimination" of the fees. If it were an elimination consumers could, I think, easily conceptualize that the costs of ATMs are not being recouped and therefore that cost would be passed on to consumers in some other way.

But, if the regulation is perceived as resulting in a reduction of revenue I think most consumers would view that as a reduction of the bank's profit and see the cost as borne by someone else...i.e., the bank's shareholders. That seems to me to be a very reasonable rational for supporting the regulation.

I think Professor Sumner's throw off response..."If they can't explain the idea, they are not well enough informed to reject it."...is typical of academic economists. If the public does not accept their rational economic explanation it must be because the public is ignorant. Not that the economists' assumption of rationality is mistaken and the public has good reasons for what it believes.

I don't mean to be criticizing Professor Sumner, I'm just trying to think outside the box.

Scott Sumner writes:

Mike, Good point.

Jared, Yes, hours will fall, and that will reduce the economy's efficiency--lowering real wages.

Airman, Good point.

Anonymous, I'm not sure that is true. Economists have good reasons, both empirical and theoretical, to prefer markets. The theory predicts that X happens when you interfere with markets. Then you look around the world (Venezuela, etc) and see X happen. How is that mix of theory and empirics not a good reason?

Lorenzo, I suppose my preference for sunsetting is linked to my perception that most regulations are bad. One thing you notice after regulations are removed is that the bad things predicted generally do not happen.

Rajat, I agree that some gun regulations make sense (although I certainly would not favor outlawing all guns). The argument on seat belts is much stronger than for cigarettes. But even if I conceded your point, the sorts of regulations you describe don't even constitute 1% of regulations out there. Most don't even have that sort of justification. The vast majority of regulations are like a ban on ATM fees, i.e. totally lacking in any theoretical justification.

Scott Sumner writes:

Mike, Suppose someone told you that Darwin's theory of evolution was nonsense. And suppose you were a biologist. You then ask the person, "OK, what's wrong with Darwin's theory?" The person then says they can't comment on the specific flaws in the theory, because they have never been exposed to the theory of evolution. They just think the general idea seems crazy. Would you consider the biologist to be "arrogant" if they thought this criticism was not well-informed?

I think it's clear from the way I asked this question that I think the biologist would be well within his rights to dismiss the complaint. "Come back to me when you actually have studied evolution, and we can talk about the merits of the theory."

You said:

"If the public does not accept their rational economic explanation it must be because the public is ignorant."

Not at all. People are free to provide good arguments against my claim, So far no one has offered any.

There is no shame in being ignorant. I'm ignorant of quantum mechanics and French poetry and corporate tax law and a million other fields that I have not studied. We can't all be Tyler Cowen. Why should the public feel offended if we correctly point out that the public is ignorant of economics? Is economics something that just falls into one's brain effortlessly, without long and difficult hours of study? Please explain.

BC writes:

It's not surprising that most of the public doesn't understand economic theory for the same reason that most of the public doesn't understand physics, medicine, software development, etc. What's disconcerting is how many professional economists, including a certain Nobel Prize winning economist, seem to be rapidly "forgetting" the core of economic theory. This seems to be a new phenomenon. I remember in the 80s and 90s reading economists' writings for popular audiences, pointing out the same sorts of popular misconceptions that Scott mentions here. Many of those economists were on the Left. Read Krugman's writings in the 90s, for example.

Lorenzo from Oz writes:

I should add that I completely agree that most regulations are bad ideas. I am just injecting a note of caution on solutions.

Sam writes:

Scott, what model (or if not a model, what informal economic argument) convinced you that anti-trust laws are welfare improving?

I ask because I know you're libertarian-inclined, and while I don't know enough of the legal or economic theory behind antitrust to have my own strong opinions, I believe many experts with similar libertarian inclinations are skeptical about the consumer welfare case.

For example, here's a link to Boudreaux's old review of Posner's Antitrust (2nd ed). It's tempting to view Posner's edifice of work as a strong argument for some form of antitrust law -- he is, after all, a very smart guy who's thought hard about both the legal and economic aspects here. But Boudreaux points to several reasons to be skeptical for the continued existence of this doctrine, even if Posner and Bork have reformed it into something much less pernicious than its original form.

Benjamin Cole writes:

Great post.

The worst regulations are property zoning and criminalization of push-cart vending.

Is there class bias in what regulations get prominently bashed?

Always we hear about the terrors of the minimum wage (slated to move back to levels of the 1970s in California), or trade restrictions (but no bashing of Ronald Reagan, the greatest protectionist since Herbert Hoover).

I do not think this class bias is intentional. I think it is deeply woven into the rhetoric of economic thought.

It is kin to the idea that gay marriage should be legal...but oh no, not polygamy!

The way we think here and now is the best way.

Scott, what do you make of information-asymmetry arguments for e.g. food and safety regs? I've recently swung in the direction of being persuaded by them, but maybe there's a counter-argument that I don't know about.

Sam writes:

Topher, I think the strongest argument against the information-asymmetry justification is the political economy point that bureaucratic incentives necessarily lead to too many type 2 errors and not enough type 1 errors. Granted, this is just a source of systematic bias and not necessarily grounds for dismissing all such regulations.

There's also the issue of paternalism. Justifying a warning label or similar as a remedy for information asymmetry seems fine in general; it's pretty low-cost. Extending this justification to outright bans on certain products seems less OK.

Scott Freelander writes:

Scott,

I favor a concept I refer to as enhanced judicial review. It would allow legal challenges to laws and regulations on empirical grounds, in terms of results versus legislative intent. So, for example, OSHA rules that cannot be empirically demonstrated to reduce workplace accidents, if that is the judged intent of the rules, would be struck down.

Felipe writes:

The same applies to the "thirteenth salary" legislation in some countries, such as Brazil.

Our labour law requires that employers pay a Christmas bonus in December, and it is equivalent to a full-month salary.

When we hire someone, in order to calculate one's monthly salary, we have to multiply the salary by 13 and then divide it by 12. In fact, one could argue this is even harmful to employees, as they will receive this money only by the end of the year

ThaomasH writes:

This makes a lot of sense if you look at "regulation" as sort of raining down with the result that very little of it lands on a Pareto improving spot. But regulation does not arise at random.

It often arises from the desire to shift some specific cost to or income from one person to another. Since cost-less lump sum taxes do not exist, this kind of regulation CAN make sense given certain preferences about marginal utilities from consumption. Of course it WILL make sense only if the analysis of how the costs or income will in fact shift as a result of the regulation is correct. Bad analysis will result in bad regulations.

But improving regulation can seldom be accomplished by JUST pointing out that there will be some costs to the regulation. We need to show that either there are other regulations that would achieve the desired income shifts at lower cost or that the costs (correctly estimated) are too high in relation to the desired shifts. We can't beat bad regulation with theory; we have to beat it with data.

Mark writes:

ThaomasH: "We can't beat bad regulation with theory; we have to beat it with data."
This may be more of a philosophical quibble, but some might say that that it is the burden of proponents of a regulation to demonstrate that it will have a net positive effect, not of opponents to demonstrate that it doesn't. For many or most regulations, the total impact is hard to measure or quantify in practice. However, this does not mean a regulation should be passed or allowed to continue simply because its impact can't be accurately measured. One can think of plenty of hypothetical bad regulations whose harm would be difficult to measure quantitatively.

Dustin writes:

Aside from the specifics of this regulation or that - It seems that a regulation is *good* if the majority of people want it.

If a regulation is economically inefficient but makes people feel good, how is it "harmful"?

Floccina writes:
This used to be a basic idea that was known to all good economists

Speaking of that, this is stunning to read now:

Joseph Stiglitz, in Caracas, Praises Venezuela’s Economic Policies

Stiglitz is an intelligent man and a Nobel prize winner!

And here is Noah Smith Most of What You Learned in Econ 101 Is Wrong
Pardon me but doesn't Venezuela show that all that we know about economics is in 101 and we sometimes cannot even figure out the mechanism. Perhaps Venezuela will push us back to what all good economists used to know.

Levi Russell writes:

"This logic applies to most other regulations, except those aimed at special market failures, such as monopoly power, externalities, and information asymmetry."

"What regulations are justified? Primarily environmental mandates (or taxes), and perhaps a few anti-trust rules. One can also justify some regulations, like minimum capital requirements for banks, on "second best grounds", due to deposit insurance."

These may be true in the abstract, but the proper (i.e. McCloskey's) interpretation of Coase suggests that operationalizing these regulations is fraught with problems.

http://www.farmerhayek.com/2015/12/mccloskey-on-coase-theorem.html

Mike W writes:

@ Scott Sumner: Why should the public feel offended if we correctly point out that the public is ignorant of economics? Is economics something that just falls into one's brain effortlessly, without long and difficult hours of study?

That brings to mind priests. I do see your point and actually pretty much agree but, if "97.34%" of consumers do not believe they are being harmed by a regulation, maybe the assumptions underpinning the economic theory are wrong. Isn't that what the behavioral economists argue?

In any case, the choice of of ATM fees as an example of bad regulation seems to be a red herring. There does not appear to be any regulatory action in the works to reduce ATM fees and no real consumer hue and cry, even though fees have been increasing, because the fees are fairly easily avoided.

There was though an ATM related regulatory action concerning consumers being adequately informed of the amount of fees before they completed an ATM transaction.

And regarding bank fees, in 2009 "the Federal Reserve Board...announced final rules that prohibit financial institutions from charging consumers fees for paying overdrafts on automated teller machine (ATM) and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions."

Apparently the banks were overdrawing customers accounts when they made an ATM withdrawal and then charging high overdraft fees without informing the customer of the overdraft or giving them an opportunity to cancel the transaction.

So, there seem to be plenty of examples (my wife's industry, cable TV, is infamous) that bear out the claim that without some kind of government pressure and advocacy on behalf of consumers large businesses and even whole industries will take advantage of their customers. Traditional economic theory seems to assume away this real world fact.

Scott Sumner writes:

Sam, You asked:

"Scott, what model (or if not a model, what informal economic argument) convinced you that anti-trust laws are welfare improving?"

I have yet to be convinced. My point was that they might be.

Topher, I am not persuaded by that argument. It might be true, but the empirical evidence suggests otherwise.

Scott, I think a simpler solution would be to abolish OSHA. But your idea might also help.

Felipe, Good example.

Thaomas, That's probably true in less than 1% of cases. Indeed in the majority of cases (like free ATMs) it would not even help the group it was intended to help.

Dustin, You said:

"If a regulation is economically inefficient but makes people feel good, how is it "harmful"?"

That's an oxymoron. The definition of "economically efficient" is "makes people feel good."

Levi, Yes, it's difficult in practice.

Mike, You said,

"That brings to mind priests. I do see your point and actually pretty much agree but, if "97.34%" of consumers do not believe they are being harmed by a regulation, maybe the assumptions underpinning the economic theory are wrong. Isn't that what the behavioral economists argue?"

Not as far as I know.

As far as cable TV, the biggest problem is regulations that make it difficult for new firms to enter the industry. If we deregulated cable TV, the industry would be more competitive.

Matthew Waters writes:

"As far as cable TV, the biggest problem is regulations that make it difficult for new firms to enter the industry. If we deregulated cable TV, the industry would be more competitive."

For my regular job, I read the Public Utility Holding Companies Act and the history of utility regulation. The actions of utilities looked very much like the actions of cable companies today. High-speed Internet is at best a duopoly and, depending on telephone infrastructure, often a monopoly.

There were franchises that cable companies got, but many places have removed those laws and there is not capital investment for parallel coaxial lines.

Natural monopolies are tough. There's a lot of venture capital to find businesses who may become monopolies. But natural monopolies which exist for decades are less justifiable. The original capital decision was made long-ago and it's hard to see monopolistic rents today increasing efficiency.

Matthew Waters writes:

I also think the overtime rules can be justified on information asymmetry grounds, not on free lunch grounds. There are many more frictions in the employment market than other markets.

I didn't really see information asymmetries and bargaining power discussed in the overtime post. Aaron McNay had some posts about it. Most academic results on unequal bargain power are in legal journals, not economics papers.

"Topher, I am not persuaded by that argument. It might be true, but the empirical evidence suggests otherwise."

That's interesting. Citations?

Alex Tabarrok writes:

I call this the Happy Meal Fallacy.

José Romeu Robazzi writes:

Prof. Sumner and other commentators: I skipped most comments so maybe somebody else already pointed out the following argument. I will go back to the ATM example.

If the banks charge fees and later the government issues regulation that bans fees, of course there would be an extra cost that will be accounted for somewhere else, let's say the banks profits get reduced by the same amount.

Somebody said that in that case, if it only hurts banks profits, maybe it should be acceptable. Sorry to say that bank shareholder may not like it, and could just stop offering ATMs altogether. This prevents consumers from having another fee, yes, but also strips them from the convenience of ATMs.

This the effect on supply that bad regulation has. It, in fact, reduces potential (and actual) GDP.

Scott Sumner writes:

Topher, I linked to a study on OSHA, and there are studies showing that the FDA may have done more harm then good, although I don't have them at my fingertips.

Unfortunately I was taught lots of this stuff back in the late 1970s, and don't recall all the specific papers.

Matthew, I am very skeptical of the information asymmetry argument for the overtime rules. You also have to account for the fact that real world government interventions are generally far inferior to the theoretical ideal. Hence the market failure needs to be really large.

In my town we have three cable companies, but I guess that's unusual. Of course there is also satellite TV, and there are other internet based delivery systems emerging. Most studies I've seen suggest that public regulation of utilities often does more harm than good. As I said in my post, monopoly and externalities are two possible valid reasons for regulation. However very few regulations are based on those two consideration. Far more regulations promote monopoly, by setting up barriers to entry.

Jose, I would add that there are 1000s of banks in the US. Any regulation based on the idea that the cost will be absorbed in lower profits is very dubious. What would people think if Congress passed a 10 cent increase in the gas tax, and then said "don't worry, it will come out of oil company profits"? Is that plausible?

Alex, Much better than my post.

Robert Hutchings writes:

Regulations are necessary to "regulate" the vagaries of a Capitalist economy. We may agree that Capitalism is a superior system, but, as with any system, there will always be excesses in some areas along with some insufficient areas. No system is perfect, but some free-market Capitalists have posited that their system is almost flawless. This is simply not true. If a pharmaceutical company has a rogue CEO who raises the price of a cancer medication by 1000%, what corrective agents are available in the "free market?"

I know conservatives hate regulations, but many have proven to be useful in the long run.

MikeP writes:

No system is perfect, but some free-market Capitalists have posited that their system is almost flawless.

Do not mistake "can almost never be improved by use of force" with "is almost flawless".

MikeP writes:

Incidentally, should I have a priori expected that the example you would use of the evils of the free market would come from one of the most highly regulated markets there is?

Andrew B. Brown writes:

"You can't have any of my money, unless you follow my orders."

The root problem is the centralization of all monetary, legal, and regulatory decisions in DC.

Monetary authority must be delegated to the States (see http://promiselanguage.blogspot.com for the solution).

David writes:

"Most"? ALL regulations are harmful because they forcibly impose the subjective standard(s) of one group of individuals upon other individuals.

zantar writes:

easy solution, and in the spirit of regulations: profit caps as a percentage of expenditure.

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