Regulatory Myths

A theme I have visited frequently in this blog is the myth that more regulations make us safer or fairer. Often I point out that complex rules and regulation favor established big businesses at the expensive of smaller companies that cannot afford lobbyists or legal challenges to onerous rules.  Larger organizations have the administrative infrastructure and political clout to game the system (politics and the media) to their advantage.  Liberal activists often fighting for specific regulatory change are often shilling for one corporation’s advantage without knowing it.

For example,  Fedex’s drivers are covered by the Railway Labor Act and UPS is governed by the National Labor Relations Act.  UPS and the Teamsters are campaigning to amend the law so that Fedex would be governed by the same act as UPS, expecting that it would be easier to unionize Fedex.  “UPS increased its lobbying expenses by 60% during its ultimately unsuccessful battle to change the law, spending more than $8,000,000 in 2009.  Fedex spent $1,500,000 a month on lobbying in 2010.”[1]

This effort seems to be an admission that their union certainly does not give UPS a competitive edge, and it shows how lobbying is often a matter of one company using political influence to gain an advantage. Or it can be seen as an effort by the Teamsters to increase their sphere of influence.  But most importantly, it shows that lobbying is an outgrowth of regulation.  One cannot criticize the growth of lobbying and still insist on increased regulation.

While many proponents of regulation seek to make the playing field fairer, the growth in rules and regulations  has had the opposite effect.  Political influence is replacing market influence and it is stifling the economy.