In Part II of Free Our Markets I make the case that regulation by market forces systematically outperforms government regulation, so we should virtually always use the former and avoid the latter.
One main reason for this I summarize in this first paragraph of the summary to Chapter 5, “Government Regulation Gets Captured by Special Interests”:
Any government intervention in any area of human relationships carries a serious risk of capture by special interest groups because it introduces force into those relationships. Thereby intervention makes it possible for special interest groups to get what they want from others without the others’ consent. The sheer availability of legal force creates a nearly irresistible incentive for people to use that force to personal advantage. They organize, they lobby, they manipulate the governmental force for personal gain, disregarding harm to others.
I chanced today on a heart-rending example of this problem, published day before yesterday at Reason.com by John K. Ross, who happens to be one of the best students I have been privileged to teach at Towson University. John’s title and subtitle tell most of the story, but if you can stand the anger it will raise in you, read the whole thing: Missouri Still Forbids Free Health Care from Outside the State, Protectionism trumps the needs of patients.