5 ms·

Exactly. Rent-seekers love to appeal to 'free market' capitalism while actually doing the exact opposite—using government power to create competitive moats.

mac01021 9y ago
I would love to be able to point to several specific examples of rent-seekers using government power to create competitive moats, but I like almost everyone , am not nearly well enough informed.
- theseatoms 9y ago
  Intuit's lobbying to keep the federal tax code complex is a fun example.
- geebee 9y ago
  How about law schools forcing everyone to do massively expensive degrees to be allowed to take the bar? Keep in mind, you can support some kind of exam and educational requirement while asserting that the scope and scale of ABA requirements represents regulatory capture.
  - maxerickson 9y ago
    There's a surplus of lawyers, so they aren't doing a great job of abusing their capture. There's also states that have an apprenticeship pathway to the bar, but people seem to think those are pretty onerous too.
    - geebee 9y ago
      The median salary for a lawyer in SF is about 200k a year. Try finding a lawyer who will work for cheap. Plenty of people are denied essential legal services because they can't afford a lawyer. Sure, the regulatory capture of the legal market does extend to areas beyond the standard law school market.
      - maxerickson 9y ago
        Isn't everything overpriced in San Francisco? Does the median salary there even tell us anything about the market for lawyers in California?
      - stevenwoo 9y ago
        The employment rate in the legal profession as lawyers for law school graduates appears to be about 70% historically for new graduates. Those who went to a top 10-20 school are doing very well and probably those to whom you are referring to in your sample. https://www.nytimes.com/2016/06/19/business/dealbook/an-expensive-law-degree-and-no-place-to-use-it.html https://www.nytimes.com/2016/06/19/business/dealbook/an-expe...
        geebee 9y ago
        Your general point is well taken, but do you think the fact that there is notable unemployment among law grads demonstrates that the ABA requirement (in most states) that people complete a very expensive three year degree is not an example of regulatory capture? Or that the existence of a non trivial number of law grads proves that the requirement does not affect the availability and price of legal services? As you can probably tell, I do think the ABA does still function effectively as a cartel. In fact, the seemingly paradoxical co-existence of brutally indebted and underemployed law grads and the lack of available and affordable legal services may in fact be a consequence of cartel-like behavior in the legal industry. If very smart people were allowed to self-study and take the bar, they might be able to offer lower cost legal services, free of the severe debt that accompanies a 3 year JD at UC Irvine, for example. Honestly, I'm not even sure the quality of lawyers would go down if we eliminated the requirement. Why? Because really smart people who can learn rapidly may be turned off by a program that forces them to go through 3 years at 50k a year, when there are other fields that allow them to learn at a more rapid pace. If the bar exam remained rigorous, allowing smart people to learn at their own pace might actually draw more talented people in, yet in a way that would allow them to keep prices lower. It might also be possible to require some apprenticeship and coursework, but less onerous and with less debt. Keep in mind, regulatory capture can involve expanding reasonable requirements for licensure into unreasonable and onerous ones. Arguing that regulatory capture exists does not commit you to arguing agains any regulation. I want to be clear this is just a thesis - I'm intrigued by the possibility, and as you can tell, it think there's a good chance it's true, but no, I'm not totally convinced, and it's hard to test - to really know, it would have to happen at scale, with enough time to ramp up, something that could take a generation or more.
- tunap 9y ago
  Read up on Lawrence Lessig for an unpopular(sadly) view and many pervasive instances of corporate socialism and legitimized corruption, aka: lobbying. Mega corporates bleeding red until the competition can no longer afford to compete, closes shop and we are left with oligops in most categories. Sometimes it seems like we have nothing but moats all the way down.
  - mac01021 9y ago
    > Read up on Lawrence Lessig for an unpopular(sadly) view and many pervasive instances of corporate socialism and legitimized corruption, aka: lobbying. I read his book about lobbying and campaign finance. I don't recall that it did much to point out specific cases where a person or corporation lobbied for the government to create anticompetitive conditions. It might have been a more persuasive book if it had. > Mega corporates bleeding red until the competition can no longer afford to compete, closes shop and we are left with oligops in most categories. This is indeed a thing that happens a lot. But it does not mean the government has been used as a tool to suppress competition.
    - tunap 9y ago
      I don't recall the title ATM, but he laid out a pretty thorough description on how ADM & Monsanto have gamed the system. So when people talk about farmers+subsidies is good to know a large % goes to those two companies. If memory serves was in excess of 80 or 90%. Quick search resukts didn't jump out at me.
fivestar 9y ago
And that is your healthcare and insurance industries writ large.

mac01021 9y ago

I would love to be able to point to several specific examples of rent-seekers using government power to create competitive moats, but I like almost everyone , am not nearly well enough informed.

theseatoms 9y ago
Intuit's lobbying to keep the federal tax code complex is a fun example.
geebee 9y ago
How about law schools forcing everyone to do massively expensive degrees to be allowed to take the bar? Keep in mind, you can support some kind of exam and educational requirement while asserting that the scope and scale of ABA requirements represents regulatory capture.
- maxerickson 9y ago
  There's a surplus of lawyers, so they aren't doing a great job of abusing their capture. There's also states that have an apprenticeship pathway to the bar, but people seem to think those are pretty onerous too.
  - geebee 9y ago
    The median salary for a lawyer in SF is about 200k a year. Try finding a lawyer who will work for cheap. Plenty of people are denied essential legal services because they can't afford a lawyer. Sure, the regulatory capture of the legal market does extend to areas beyond the standard law school market.
    - maxerickson 9y ago
      Isn't everything overpriced in San Francisco? Does the median salary there even tell us anything about the market for lawyers in California?
    - stevenwoo 9y ago
      The employment rate in the legal profession as lawyers for law school graduates appears to be about 70% historically for new graduates. Those who went to a top 10-20 school are doing very well and probably those to whom you are referring to in your sample. https://www.nytimes.com/2016/06/19/business/dealbook/an-expensive-law-degree-and-no-place-to-use-it.html https://www.nytimes.com/2016/06/19/business/dealbook/an-expe...
      - geebee 9y ago
        Your general point is well taken, but do you think the fact that there is notable unemployment among law grads demonstrates that the ABA requirement (in most states) that people complete a very expensive three year degree is not an example of regulatory capture? Or that the existence of a non trivial number of law grads proves that the requirement does not affect the availability and price of legal services? As you can probably tell, I do think the ABA does still function effectively as a cartel. In fact, the seemingly paradoxical co-existence of brutally indebted and underemployed law grads and the lack of available and affordable legal services may in fact be a consequence of cartel-like behavior in the legal industry. If very smart people were allowed to self-study and take the bar, they might be able to offer lower cost legal services, free of the severe debt that accompanies a 3 year JD at UC Irvine, for example. Honestly, I'm not even sure the quality of lawyers would go down if we eliminated the requirement. Why? Because really smart people who can learn rapidly may be turned off by a program that forces them to go through 3 years at 50k a year, when there are other fields that allow them to learn at a more rapid pace. If the bar exam remained rigorous, allowing smart people to learn at their own pace might actually draw more talented people in, yet in a way that would allow them to keep prices lower. It might also be possible to require some apprenticeship and coursework, but less onerous and with less debt. Keep in mind, regulatory capture can involve expanding reasonable requirements for licensure into unreasonable and onerous ones. Arguing that regulatory capture exists does not commit you to arguing agains any regulation. I want to be clear this is just a thesis - I'm intrigued by the possibility, and as you can tell, it think there's a good chance it's true, but no, I'm not totally convinced, and it's hard to test - to really know, it would have to happen at scale, with enough time to ramp up, something that could take a generation or more.
tunap 9y ago
Read up on Lawrence Lessig for an unpopular(sadly) view and many pervasive instances of corporate socialism and legitimized corruption, aka: lobbying. Mega corporates bleeding red until the competition can no longer afford to compete, closes shop and we are left with oligops in most categories. Sometimes it seems like we have nothing but moats all the way down.
- mac01021 9y ago
  > Read up on Lawrence Lessig for an unpopular(sadly) view and many pervasive instances of corporate socialism and legitimized corruption, aka: lobbying. I read his book about lobbying and campaign finance. I don't recall that it did much to point out specific cases where a person or corporation lobbied for the government to create anticompetitive conditions. It might have been a more persuasive book if it had. > Mega corporates bleeding red until the competition can no longer afford to compete, closes shop and we are left with oligops in most categories. This is indeed a thing that happens a lot. But it does not mean the government has been used as a tool to suppress competition.
  - tunap 9y ago
    I don't recall the title ATM, but he laid out a pretty thorough description on how ADM & Monsanto have gamed the system. So when people talk about farmers+subsidies is good to know a large % goes to those two companies. If memory serves was in excess of 80 or 90%. Quick search resukts didn't jump out at me.

fivestar 9y ago

And that is your healthcare and insurance industries writ large.