April 25, 2016 | Jeffrey Carter | www.pointsandfigures.com
When the WW2 Museum dedicated P-51 last week, I recalled the words of Martin Luther King. He said, “One has a moral responsibility to disobey unjust laws.”
Technology is moving at an unbelievable pace. There are things that can happen that weren’t even contemplated by regulators in the past. As an investor, I invest in things that potentially can change the way the world does business, interacts, and shares information. Startup companies often will rub up against regulations.
Regulations aren’t what you assume. Economic Nobel Prize winning Chicago Booth Professor George Stigler found, many times regulations aren’t written to protect innocent people. They are written to provide a regulatory barrier for the corporations that endorse them. I think this is especially topical today as we see politicians rail against special interests.
Stigler uses a simple model of regulation: A regulator faces special interest pressure from producers and electoral pressure from consumers. The special interest pressure is always more “persuasive,” so producers always win. Regulations are passed only for the benefit of large firms, not for the benefit or protection of consumers.
Are these regulations that are passed “moral” any more than Jim Crow laws passed after the Civil War?
I think this is a really good argument to have as government tries to extract value out of companies like Uber and AirBnb. Shouldn’t people be able to freely transact? If I own my property, why should I have to pay taxes to the government on it’s private use when I already pay property taxes to that same government?
As we have seen with the financial crisis, the SEC didn’t protect anyone. They did investigate post crash and mete out a bunch of fines to banks and other companies. Virtually no one went to jail. They also ignored the quasi government organizations that enabled the bankers. Does anyone think Dodd-Frank will help?
The federal regulatory register is chock full of horrible regulation that makes zero sense in today’s economy. The regulations actually stop people from engaging in business that could help people. Every single industry has lots of regulations that were put there by big companies to keep smaller companies from competing. Just a tip, it’s not Congress, it’s the alphabet soup of government agencies that get in the way.