Businesses Against Deregulation

by Ryan Young on November 13, 2012

in Features, Regulation

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Most people believe that businesses abhor regulations and would love to do away with them entirely. This belief is often wrong. Many regulations make it harder for startups to enter the market, and can hobble smaller competitors. That’s why incumbent firms in many industries regularly welcome new regulations with open arms, and will spend millions on lobbying to pass them. It’s a way to keep the competition out.

Here is one historical example from the successful push to deregulate the trucking industry during the 1970s. About the only people who opposed deregulation were in the trucking industry itself. Check out the lengths they went to to preserve anti-competitive regulations:

In the 1978 hearings on trucking before the [Sen. Ted] Kennedy subcommittee, the industry offered the testimony of a paid consultant. Senator Howard M. Metzenbaum, Democrat of Ohio, producing a copy of the consultant’s original proposal, indignantly pointed out that he had essentially promised his study would support regulation before he was hired. Later, in an elaborate statement of its position before the Senate floor debate, the industry gave prominent attention to a purported critique of trucking deregulation by a Stanford University economist. Cited without facts of publication, the source turned out to be a commentary in the Los Angeles Times that was more cautionary than critical and described no research.

-Martha Derthick and Paul J. Quirk, The Politics of Deregulation, p. 125.

Something to keep in mind the next time someone calls a regulatory skeptic an industry shill. The precise opposite is usually the case.

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