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You need regulation with teeth, that is reviewed and updated dynamically with the marketplace it is regulating to ensure fair competition AND consumer benefit.

• eru 6y ago
  > The alternative you mentioned of no regulation can't exist, because someone is always regulating the market, if not the .gov, then whoever has the biggest clout within the marketplace gets to play regulator and gatekeeper often to the detriment of the competition and consumers. Yes, exactly. I am suggesting that competition and low barriers to entry to ensure that it's _customers_ that are regulating the markets, whenever possible. > You need regulation with teeth, that is reviewed and updated dynamically with the marketplace it is regulating to ensure fair competition AND consumer benefit. I agree that regulation needs to have teeth. My favourite example of a jurisdiction with light regulation but lots of teeth is my adopted home of Singapore. By and large, our government here leaves the economy alone, but when they implement some regulation, they do so properly and enforce it. > Right now we have regulations that heavily lag current realities and weak regulatory bodies that can be corrupted or lack power to effect change. Honest and competent civil servants are the rarest and most precious of resources. Arrange matters to economise on their time and energy. An interesting example of that principle is in bankruptcy law. There are generally two ways to deal with a business can't pay: (1) Cut a deal with the creditors (2) Liquidate the business and pay off the creditors as much as possible according to the fine print signed If the business in question is a going concern, (2) is a losing proposition, but its very possibility tends to encourage everyone involved to work out a deal under case (1). (And even if you sell off the business to the highest bidder in case (2), the new owner can opt to continue running essentially the same organisation, if that makes sense.) In a sane legal system, the judiciary might be involved briefly for option (2), if current management is unwilling. But most of the time, all participants can just agree that negotiations failed, and proceed with orderly liquidation. Now in eg the US that beautiful simplicity is marred by a third option, where a judge gets involved big time. Judges are (hopefully) almost the prototype of a highly trained, honest, competent civil servant. Alas, the very existence of this third option, blunts the previously sharp incentives on everyone to get a deal done under case (1). To come back to your point: it's also pretty obvious that there's many more opportunities for corruption and graft for the court appointed manager in the third case, than the simple auction of all assets in the second case.
  • Klinky 6y ago
    I want to add that consumers are weak and voting with your wallet is often not possible in a constrained market, plus many consumers are stupid or "not rational" and make poor choices and are easily swayed by marketing. Obviously we don't want to remove all avenues for self determination, but I don't think adhoc regulation or relying on consumers to reign in global corporations who now have market caps greater than GDPs of large countries is an effective option. Finding good civil servants is difficult, but so is finding honest and effective businessmen who genuinely have consumer interest in mind.
    • dalbasal 6y ago
      It's not about honest individuals, nor smart consummers. It's about structures. Trying to fix monopolies with regulators is like trying to fix monarchy with princes. Regulators harden market structures.
      • Klinky 6y ago
        Trying to fix monopolies by allowing them to continue to exist results in the monopoly continuing to exist. How is this better? There is nothing in a "free market" that disallows a monopoly existing or continuing to exist forever, buying and extinguishing all competition in its wake. It is essentially the end game, ultimate vertical integration and market dominance. You might say some startup is going to "disrupt" these incumbents, until we reflect on all the cool products bought and extinguished by the FAANGs. Basically you're relying on the monopoly getting lazy and hoping there's enough interest and capital available to do battle, all the while consumers get reamed for who knows how long.
        • eru 6y ago
          Buying upstart competitors ensures that founders and VC are motivated to provide a steady stream of upstart competitors. Ultimate vertical integration has been tried as a fad on and off. But it did not endure. None of the FAANGs are all that vertically integrated. Apple doesn't even make their own hardware in-house, do they? (Foxconn makes most of the phones, don't they?) If the monopolists are reaping excess profits (or having high costs) there's an incentive for new market entrants to come and take a share of those profits. If the monopolists keep prices low enough that this doesn't happen, then consumers don't have too much to complain about, do they?
• dalbasal 6y ago
  Financial regulators have teeth. That's besides the point though. Large banks and regulators are, effectively, a single entity.