Dear Regulators: The Free Market Works

Dear Business Regulators:

I know there is job security in regulating everything on the planet, and I sympathize with your need to prove your existence is necessary. But is it too much to ask that you read a business book, magazine or newspaper article or a blog once in a while? A subscription to the Wall Street Journal would be nice. Perhaps, you might even consider a traipse through the want ads. Surely there are jobs you could do that would cause less harm to the economy.

You see, business straightens itself out eventually. It's true. There is some fraud and stupidity in the business world. So let the justice department punish the fraudulent and ignore the stupid, for they will eventually blow themselves out. But all in all, businesses and their customers would be a lot better off if you would all take an extended vacation, without pay. And so would the economy. Here's just one example of what little good comes from all your messing around.

For decades you imposed CAFE Standards, manipulated oil prices and required auto design features that costs us all money. What good did it do? With all your hearing and writings, here are the results:

We failed to implement an effective energy strategy, encouraged citizens to purchase gas guzzlers, and rewarded American auto manufacturers for producing them. If you had only done as the rest of the world has and allow oil prices to reach their appropriate pricing levels, which likely would have been lower and more affordable than they are today, the marketplace would have created what you can never produce. Incentives for innovation.

For the first time in American consumer history, about one in five vehicles sold was a compact or subcompact car during April, compared to the sales of  sport utility vehicles a decade ago, when one in every eight vehicles sold was a small car. Today, sales of pickup trucks and large sport utility vehicles have dropped sharply, while four-cylinder engines surpassed six-cylinder models in popularity. (See As Gas Costs Soar, Buyers Flock to Small Cars, the New York Times.)

Now if you had just gone away and left business and prices alone, and we instead used the tax dollars saved to become energy independent, not only would American auto makers been forced to look to the future, instead of the past, for their car designs, new energy industries would be creating jobs and perhaps we wouldn't be in Iraq today.

Surely, you don't think the Japanese are smarter than American engineers. Nope. It's your fault. Manipulating the economy is a bad idea and removes incentives for American businesses to take risks and employ visionary thinking. After all, trucks and SUVS, even for the Japanese, were the engines that fueled profits for the past two to three decades. It would have been stupid not to make them, with a barrel of oil hovering between $20 and $30.

I know, I'm simplifying and it's easy to be a backseat driver. But, hey, many of us have been complaining our entire lives about your propensity for over-regulating industry. I'm not talking about regulations and legislation that protect people from job discrimination or dangerous work environments and the like. (Although even in those areas, you should take a deep breath.) Nope! I'm talking about politicians and bureaucrats who hold hearings and come up with unworkable solutions, primarily because that's what you do. And you do it with little or no knowledge of the real effects of what you do will have on the economy, business and people. Gee, who's running the funny farm these days? And, oh, by the way: Your work doesn't make anyone laugh.

We don't need you to tell us how to run our businesses, how to make our products, or how much profit we should bank. The consumer will do that, without your meddling. Mostly, we need you to get out of the way and let the free market do its thing. You'd be amazed how well people will do without your constant meddling.

Respectfully yours,

Lewis

Comments

[Cam Beck]

Dear Business Regulators,

Me too.

Respectfully,
Cam

[Lewis Green]

Cam,

I was thinking of you the entire time I was writing this post and thought you might be among my earliest visitors today. Thanks and have a great weekend. I look forward to hearing from those who both agree and vehemently disagree with my take. Could be very informative.

Lewis

[j@CorePage]

I'm voting for you!
Lewis 2008 all the way!

_j
community manager
CorePage | Know more. Sell faster.

[Lewis Green]

J,

Well, that’s two votes: Yours and my wife. Wait! Make that one vote—yours. Thanks for stopping by.

Lewis

[Mario Vellandi]

I agree. But (and don't you just LOVE that 'but'!)...I believe in the case of where mans/businesses actions can have externalities on 3rd parties and the environment, we should critically examine the structural & cultural mechanisms at hand, and see if we can use 'Design' thinking to positively change behavior without being forceful.

I don't like Regulation per se, but obviously minimum acceptable standards to protect the consumer, citizen, worker, investor, and organizational entity are in order. Why were things like the FDIC established? Dangerous chemicals banned from consumer goods? And a variety of things we currently take for granted - regulated? Naturally, there's a cost benefit analysis involved before enacting sound law. Sometimes voluntary action is widespread and Smith's hand makes positive change before laws are passed.

I prefer to see a well-designed mix of economics, incentives/disincentives, and voluntary guidelines attempt to positively change the future BEFORE people jump to the regulation bandwagon as a means of change.

Only naive lazy pansies attempt to kill weeds in a flowerbed by applying industrial-strength chemicals. Smart gardeners will try to figure out how they can address the problem in a variety of ways that will keep the flowers & soil healthy, while being time and cost-effective about it.

[Lewis Green]

Mario,

As always, your comment offers good analysis, critical thinking and several solutions. Most people and most businesses want to do the right thing. Regulation doesn’t help them do so. Information, incentives and cost-effective solutions do. Thank you for being a loyal reader. I greatly appreciate your input.

Lewis