Regulation often serves primarily to protect incumbent businesses from new entrants, and to protect big guys by imposing costs that small guys can’t handle.
Matt Lewis at the Daily Caller thinks he’s found an example of this in copyright laws banning sampling:
“[W]hat’s happening to sampling, it’s now become for the elite,” says Hank Shocklee in a promo for the forthcoming documentary, ‘DUST: the Art of Sampling’. “Jay-Z and Kanye can afford to pay the sample rates, but not the kids starting out in their own little home studio in their house.”….
Regardless of how one might feel about patents and intellectual property rights, it is clear this law acts as a barrier to entry, thus benefiting incumbent stars like Kanye — while punishing upstarts who might want to unseat him.
I like the way Lewis frames it in the second paragraph above: We can set aside the question of whether these laws are just or prudent for a moment, and conclude that, for better or for worse, they help the big guys and hurt the small guys. That doesn’t tell us whether we should change the law. But it at least informs the debate over the law, and reminds us that the standard narrative of regulation — that it curbs the excesses of big guys and protects the little guys — is a myth.
Here are some examples of Big Business supporting regulation of itself and benefitting from it:
- Mattel, the world’s largest toymaker, supported strict new federal toy-safety regulations
- Philip Morris, the world’s largest tobacco company, supported strict new federal tobacco regulation.
- Wal-Mart, the nation’s largest non-government employer, supported a higher minimum wage and an employer-mandate in health insurance.
- GE supported strict efficiency standards on light-bulbs.
- Nike supported climate-change rules that crush its smaller competitors who actually make things in the U.S.
- Big food producers supported new food-safety regulations.
- H&R Block supported new regs on tax-preparers
- The financial planning industry group called for more federal regulation of financial planning.
- Hedge-fund giant Jim Chanos advocated federal registration of hedge funds.
- The American Bankers Association applauded new federal credit-card regulations.
- The big trucking companies supported new trucking regulations.
p.s. I’ve written in the past on Jay-Z making money off of big government.