Exactly. Regulation is THE KEY WAY large corporations keep their competitors out. This is one of the most important things people who constantly call for more regulation in the name of “good government” just don’t get. Regs are usually written with insider lobbyists.
Obamacare could have been called Cronycare (and we did call it that). It was written to large degree by the hospital companies, the insurance companies, and Pharma. The stock prices for companies in each sub sector all generally outpaced the bull market that started in 2009. Why might that be do you think?
“Net neutrality” was written with the help of Google and many other industry giants. In fact these companies got to see the legislation before the public did.
And now Zuck is calling for the regulation of social media. Big surprise.
Only the paranoid survive in Silicon Valley, right? Zuckerberg may be young (he’s just 33) but he’s old enough to remember MySpace and Friendster. And he’s certainly aware that Facebook’s “pivot to video,” brief emphasis on live events, and push for “insta-articles” didn’t work out well for his company, publishers, or individual users. He hangs around with people who don’t just remember AOL and Netscape but also invested in them. The history of business is a cemetery of whales, of “too big to fail” juggernauts who are barely remembered these days. The supermarket chain A&Ponce had bigger market share in its sector than Walmart does today. It revolutionized the buying and selling of groceries and has passed away, little-remembered and little-missed. Only 60 companies that appeared in the 1955 version of the Fortune 500 were still there in last year’s list, economist Mark Perry reminds us. More important for the current conversation (emphasis in original):
At the current churn rate, about half of today’s S&P 500 firms will be replaced over the next 10 years as “we enter a period of heightened volatility for leading companies across a range of industries, with the next ten years shaping up to be the most potentially turbulent in modern history” according to Innosight…
…So goes Facebook. By not simply relenting to regulation but actively embracing it and, more important, shaping it to his company’s maximum benefit, Zuckerberg might just make sure that Facebook sticks around far longer than it would otherwise. In the parlance of historian Burton W. Folsom, the “market entrepreneur,” who makes a fortune by providing a new or improved service at a great price, almost inevitably evolves into the “political entrepreneur,” who uses regulation and other connections to stay on top. This predictable but dispiriting two-step may well be the greatest challenge to libertarian economics. It certainly is one of the toughest problems to fix.
Nick Gillespe is absolutely correct on this last point particularly. Crony capitalism might indeed be the greatest challenge to libertarian economics. How does one allow the market to work and keep businesses and other special interests from gaming the system for their benefit?
The answer (to a very large degree) is to limit the catalyst of cronyism, government. But that is a bitter pill for many who still think more government is the answer. It will take a massive shift in the understanding of civil society for many people to see that generally, more government is actually hurting them. Until then the Facebooks of the world will keep writing the laws. It’s the progressive way, going right back to the days of Woodrow Wilson. Corporate/Government partnerships to gather power and wealth for the connected.