Steve McEllistrem

The Devereaux Dilemma

Why We Need Regulation

American business leaders like to say they’re over-regulated, and if government would just get out of the way, the free market would handle everything, self-correcting when necessary.

Many of them think of government as an evil that should be kept as small as possible. They cite instances where big government – an inefficient beast, to be sure – has bungled some project (like the rollout of Obamacare) that the private sector would no doubt have avoided.

But there are a few problems with their position.

First, capitalism, left unchecked, does not freely correct itself. It creates monopolies that bully those who would compete against them. Does anyone really think that Apple, Google, United Health and Wal-Mart want competitors to force them to lower their prices? Of course they don’t.

Some say that innovation will inevitably come along with a better model of whatever service or product has the monopoly and force systemic change.

So what?

In the meantime, for 5 or 10 or 20 years, the monopoly will dictate everything and crush all those innovators who are not sufficiently capitalized or secretive or lucky to survive their trampling.

Second, the private sector rarely has to worry about operating on the scale that government does. If it did, it would make many, if not all, the same mistakes that government does. Big companies have lots of inefficiencies, just like big governments. That’s why monopolies tend not to survive over the long haul. But they create lots of misery while they’re on top.

Third, companies are generally not concerned with the public welfare. Their focus is on maximizing shareholder profit. Companies that have done good deeds for the sake of the public have been sued for failing to maximize profits – that’s why 15 states and the District of Columbia have legislated the creation of public benefit corporations.

Without regulation, companies could run amok, leaving us to clean up their messes. See any number of industrial cleanup actions (particularly in mining and energy) for evidence of their short-sightedness.

So I wish our “Leaders” would stop defaming our government and instead work on ways to make it work better – more efficient and more responsive. Because we need a strong government to rein in the excess birthed by capitalism. We don’t want a dictatorship, but we are not helped by a toothless tiger either.

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