Policy: Law

The Left increasingly seeing regulation as crony protectionism

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Beltway Confidential,Opinion,Timothy P. Carney,New Jersey,Chris Christie,Law,Tesla,Government Regulation,Cronyism,Uber

Regulation is often the means by which politicians and incumbent businesses collude to amplify their own power and wealth at the expense of outsiders — including competitors and consumers.

While many in the mainstream and liberal media see arguments against regulation as, per se, advancing the interests of big business, left-of-center writers are increasingly seeing what libertarians have always emphasized: Regulation is often cronyist protection.

Car dealers in many states enjoy a government mandate -- that is, no automobile may enter the consumer market, except through dealers. This cartel famously arose when Gov. Chris Christie's administration in New Jersey told Tesla (which makes plug-in cars) that it couldn't have a showroom in the Garden State.

Left-of-center writer James Surowiecki at The New Yorker has a piece up about this aspect of regulation. He approvingly quotes one expert saying of these laws, "It's just dealers trying to protect their profits.”

Surowiecki sees a theme:

It isn’t just auto dealers. State regulations are littered with provisions designed to protect incumbent businesses. In most states, retailers and restaurants have to buy alcohol from wholesalers rather than directly from producers. And there’s an ever-growing thicket of occupational licensing regulations. For some professions, a licensing requirement makes sense. But, according to a 2008 study, almost thirty per cent of jobs now require a license in some state or other, including many — auctioneer, shampooer, home-entertainment installer — where licensing seems totally unnecessary.

State governments have been looking out for local businesses since way back — in the nineteenth century, they forced travelling salesmen to pay extortionate fees — and they haven’t minded too much when this protectionism comes at the expense of consumers.

You can find similar sensitivity to this aspect of regulation when it comes to Uber, food trucks, organic food or online gambling.

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