I agree that large companies use government regulation to as an entry barrier to competition from small companies, often by leveraging “economies of scale” in dealing with regulatory compliance. This makes the anti-competitive effect of the regulations less obviously directed at competitors. Performance-based regulatory standards (e.g., building codes, pollution controls, etc.), can also be used this way if compliance requires significant up-front investment.
Regarding government favoring large industries, there are additional mechanisms/incentives besides campaign contributions (which may go to legislators, but generally don’t go to the regulators themselves). Large companies have a lot of employees (voters). They have expertise in the industry/domain being regulated. Government regulators often come from the industry being regulated. It’s “safer” to pick someone who has experience with an established company than to pick someone who has no track record in the industry. Regulators want to be successful. It’s a lot easier to deal with a few large companies and monitor their compliance (with their active assistance) than it is to deal with hundreds or thousands of small companies – and you can get quicker results, at least on paper, so you can show the legislators and voters that “you are doing something” about whatever problem the regulation is intended to address. Dealing with lots of small companies is expensive, messy, and has potential negative publicity associated with it – big bad regulator picks on small company just trying to make a living.
From: ontolog-forum-bounces@xxxxxxxxxxxxxxxx [mailto:ontolog-forum-bounces@xxxxxxxxxxxxxxxx] On Behalf Of sowa@xxxxxxxxxxx
Sent: Tuesday, June 05, 2012 11:07 PM
To: doug@xxxxxxxxxx; [ontolog-forum]
Subject: Re: [ontolog-forum] Self Interest Ontology
> John emphasizes that lobbyists enhance the perceived self-interest of
> their corporations by writing (laws and) regulations to harm their
Just note that article I sent about the South Sea Bubble. Shortly after they got their stamp of approval from the King, they lobbied to cripple the competition by forbidding any stock to be traded unless the corporation had a charter from the King.
Corporations have been doing that even before Adam Smith was born. Those are the kinds of shenanigans that destroy the efficacy of the "invisible hand". When the South Sea Bubble burst, the difficulty of forming new businesses prolonged the disastrous effects.
Big business is the natural enemy of small business. Government has a tendency to take the side of big business because they give bigger "campaign contributions". But when you weaken the elected government, there are no barriers of any kind to stop big businesses from becoming the worst imaginable kind of de facto government.
Have you ever heard of the company towns run by mining corporations in the 19th century? Just listen to the song "16 Tons". That is called laissez faire. That is why the Republicans passed the anti-trust laws.