Businesses want to be regulated

Many people think that businesses to not like “regulations,” that is government mandates and prohibitions on how they can operate.  Economist Bruce Yandle provides many counter-examples. For the curious:

  1. In 1802, Why did the owners of newly built water-powered textile plants that support child labor laws in England?
  2. Why did “American Telephone and Telegraph Company chairman Theodore Vail successfully called for federal regulation of long-distance telephone”?
  3. Who benefited when the Magna Carta specified a “standard width for all cloth sold in the kingdom”?
  4. “In hearings before passage of the 1972 federal Water Pollution Control Act, industrialists located along the Ohio River argued for the law.” Why?
  5. Why did “the coal interests in Ohio and West Virginia … [lobby] for the 1990 Clean Air Act amendments requiring scrubbers on newly built and modified coal-fired electric utilities.”?
  6. Why did John Deere petition the Environmental Protection Agency to increase pollution controls on small gasoline engines?
  7. Why did Chicago meat packers lobby Congress to pass the 1906 Meat Inspection Act?

And today, why do certain power companies favor legislation like cap & trade & pollution controls?

The answer to all of these questions is that companies support political controls (regulations) that shield them from competition. Often the legislation is defended on moral grounds, like protecting children or the environment (whether it does or not), but the large drive is rent-seeking – to gain unfair advantage over others, or to to mooch off of them.  The classic example is alcohol prohibition, supported by both bootleggers and Baptists.  “Bootleggers and Baptists” now refers to the concurrence of unsavory business interests and (often questionable) ethical crusading for political controls.

Read the whole article in The Freeman: We Want to be Regulated.



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Filed under politics, public policy

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