The death of competition spells doom for regulation. Competition is an essential component of effective regulation, for two reasons: First, competition keeps the companies within a sector from all telling the same lie to its regulators. Second, competition erodes companies’ profits and thus starves them of the capital they need to overpower or outmaneuver their regulators.
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While not all regulation is wise or helpful, a world without regulation is a catastrophe. That’s because, in a highly technological world, your ability to do well (or even to live out the day) requires that you correctly navigate innumerable highly technical questions that you can’t possibly answer.
You need to know whether you can trust the software in your car’s antilock braking system, whether you should heed your doctor’s advice to get vaccinated, whether the joists over your head at home are sufficient to keep the ceiling from falling in and killing you, and whether your kids’ schooling is adequate or likely to turn them into ignoramuses.
Tech-like apps can obfuscate what’s really going on, sloshing a coat of complexity over a business that allows its owners to claim that they’re not breaking the law.
It’s not that you lack the intellect and discernment to answer each of these questions. You’re a smart cookie. Given enough time, you could get a PhD’s worth of education in software engineering, cell biology, material science, structural engineering, and pedagogy; investigate each of the offerings before you in each of these categories; and make an intelligent choice that reflects your priorities and the trade-offs you’re willing to make.
The problem is that it would take you several lifetimes to acquire all that knowledge, and long before you could do so, you’d be killed by food poisoning because you guessed wrong about whether you could trust the hygiene policies at your local diner.
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It would be nice if you could let markets take care of these questions for you, but many of the consequences of wrong answers don’t manifest fast enough to steer your decision-making. Sure, if a private school turns one of your kids into an ignoramus, you can demand your money back and refuse to send your other kids to that school—but your kid is still an ignoramus. Likewise, you can punish a restaurant that gives you food poisoning by withholding your future custom, but if that’s a lethal poisoning, the fact that you don’t eat at that restaurant anymore isn’t quite the moral victory you might be hoping for.
To navigate all of these technical minefields, you need the help of a third party. In a modern society, that third party is an expert regulator who investigates or anticipates problems in their area of expertise and then makes rules designed to solve these problems.
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