Beyond the issue that regulations that add complexity are part of the problem they seek to solve, regulations are often used as competitive leverage of one corporation over another.

While limited debit card fees to 12 cents may create a revenue short fall to the banks that issue them, it will be a windfall to large retailers like Walmart.  Banks seeking to regain the lost revenues will seek to replace those dollars with other charges. Say good bye to free checking.

This is always a dangers when the government seeks to replace the pricing function of the market.  Problems do not exists in a vacuum.   The outcome of their decision is rarely accurately predicted.

Some companies actually use their accumulated ability to deal with government red tape as a competitive advantage.  We have seen those who are willing to deal  with the complexity of selling to the government gain a tremendous advantage over competitors.  We have also seen how the government pays a great premium for the complexity they require.

This complexity is actually welcomed by those who seek to gain from it .  In the June 2011 Commentary Wiliam Voegli writes  in Why Corporations Love Regulations about another such example:

Once, in an effort to commiserate with an executive in one of New York’s largest real-estate development firms, I said that complying with the city’s endless property regulations must be an ordeal. As patiently as he could, the developer explained that I was not just wrong, but exactly wrong. His firm’s great strength was that, since its founding by his grandfather, it had established an institutional capacity for building and managing real-estate projects within a specific, demanding business and regulatory context. There was, accordingly, no rationale for it to build an apartment complex in Phoenix, for example; whatever it did in Phoenix would not be any more profitable than any other developer’s work because it did not take esoteric knowledge to do business in that market. But in New York, his company could and did prosper because it had mastered a regulatory obstacle course—one that defeated most competitors.

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