Unregulated By Government Doesn’t Mean Unregulated

Many people believe that markets must be either regulated by government or unregulated. They believe that if we don’t want markets out of control, lacking in regularity, predictability, and quality control, we have to let governments regulate them.

But that’s false, because markets forces regulate markets. The actions of every market participant constrain and influence the behavior of every other market participant in ways that make everyone’s actions regular—more or less predictable, falling within understandable bounds.

Consider market prices. In healthy industries, market forces are the only regulators of prices. The prices offered by some restrict the prices others can ask in any realistic hope that they’ll be accepted. If the Giant supermarket near my home is charging $2.00 a pound for red peppers, the nearby, upscale Eddie’s Market will not be able to charge a whole lot more than $2.00 a pound and still sell many peppers. Neither will the farm stands that open nearby in the summer. All will charge roughly the same price.

There is strong regularity to the prices of red peppers at any place and time. This regulation is accomplished by each seller’s reaction to the actions of his customers and competitors. In short, market forces regulate prices.

The same goes for quality. My wife won’t buy peppers that aren’t fresh and firm as long as she thinks she can get better peppers at some other store. The grocers might wish they could sell all their peppers, even those that have been on the shelf too long, but customers like my wife, and the self-interested actions of other stores, won’t let them. Their customers’ choices and competitors’ actions restrict—regulate—the quality of produce they can offer.

If market forces regulate product quality, the question arises, do we need government regulation at all?

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No Public Service Here

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How Free Market Forces Would Regulate Banks

One of my numerous smart and interested students at Towson University (yes, I’m fortunate), a non-economics major named Kristin, has sent me the following question in response to my recent post, “One Reason Governments Should Not Regulate Banks“: How would you rely on free market forces to better regulate banks? Here is my reply: Kristin,Continue Reading

One Reason Governments Should Not Regulate Banks

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St. Louis Government Regulators v. Uber and St. Louisians

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Let Markets Forces Regulate – Taxicabs

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Who’s Anti-competitive?

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Let’s Free City Ride Services

The Freeman online has published a piece I wrote suggesting that instead of subjecting Uber, Lyft and other ride-sharing services to burdensome taxi regulations, local governments should instead stop burdening taxis with regulations. A slice: If we had free markets for city ride services, that would be the whole story so far. The preferred rideContinue Reading

Immigration Impasse

A cousin recently wrote me to ask what I think of the New York Times opinion piece, “Break the Immigration Impasse,” by Sheldon Adelson, Warren Buffett and Bill Gates. Here is my reply: Dear George, As you might expect, I like this piece. It makes eminent good sense. It’s just nuts—on its face it’s nuts—to send away reallyContinue Reading

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