Crony Capitalism and Bad Regulations: Is There a Solution?
Regulations in the US are supposed to protect us. Laws are passed on the state and federal level and regulations are introduced to ensure those laws are followed. But the world is complicated, and actions taken with the best of intentions can often turn sour. In some cases, laws made with the best of intentions are used by unscrupulous businesses to unfairly increase prices and lock out competition.
Laws are given names with soothing words like “The Patriot Act” and “The Department of Homeland Security” to reassure people that lawmakers are doing the right thing, but how many of these rules are actually keeping us safe, and how many have been subverted and corrupted to serve special interests?
Regulations Are Packaged as Public Safety Tools Meant to Protect Life, Property, and the Environment
The New Deal was a series of government programs in the 1930s intended to create relief for the poor, recovery for the economy, and reform to prevent another Great Depression. But because of its size and scope, the massive increase in bureaucracy and regulatory action created confusion in the courts and legislatures of the country.
The Harvard Law Review published a plea for transparency because even Supreme Court cases were being impacted by lawyers and judges who were not aware of the latest changes and updates. In 1935 the Federal Register was created and now publishes updates to laws and regulations on a daily basis to help combat confusion.
But the increase in regulations has led to other consequences. Harvey Silvergate and Alan Dershowitz wrote 3 felonies a Day to expose how the very laws and regulations meant to protect us can in many cases be used against any citizen at any time for any reason to deprive them of life, liberty, or property.
Sean Malone and FEE Educate People About Economics and Regulations
We talked with Sean Malone, the Director of Media at the Foundation for Economic Education, (FEE), to understand his view on how laws and regulations have been used to hurt regular people rather than help. For the last ten years, Malone has been working full-time creating videos and other media help educate regular people on economics and the ways special interests can corrupt the system.
Regulators Often Target Specific Businesses or People
Hector B. Ricketts moved to New York City from Jamaica. When he discovered his neighborhood didn’t have adequate public transportation he started a vanpool to help people out. According to Malone, the MTA and the bus union didn’t like that and started a war with him that has gone on for almost 20 years. While Ricketts has won the right to use his Vanpool to help people, the Institute for Justice claims unions and politicians are fighting Ricketts and going against the best interests of the citizens of New York by trying to put him out of business.
Regulations are Sometimes Used to Protect Special Interests and Lock Out Competition
Melony Armstrong believes that regulations got in the way of her success as a small business owner. Malone showcased her in his documentary, Locked Out. She’s the owner and operator of Naturally Speaking, a hair braiding salon in Mississippi. Armstrong discovered the hair braiding needs of the African-American community were not being met so she tried to get a license to braid hair. It turns out she had to change state law before she would be allowed to do so.
The state of Mississippi requires an occupational license to braid hair, but the licensing board is controlled by the cosmetology schools and industry advocates who benefit materially by acquiring new students and controlling competition. The classes and licensing process usually takes two years and costs about $20,000, but according to Armstrong, the schools do not teach hair braiding and would not contribute anything to help Armstrong do her job.
Melony Armstrong was locked out by special interests who wanted her money and had no interest in serving the African-American community of Mississippi.
Education and Activism Can Make a Difference
Laws and regulations are supposed to protect us, but special interest groups and corporate interests may corrupt the process. Through education and citizen involvement, regular people can fight back and expand justice in their towns and cities, and you can even win in highly regulated markets like Hector Ricketts did in New York City.
It was a privilege talking to Sean Malone about his efforts to increase awareness and education about the good and bad effects of new laws. His illustrations of people who have fought back and won against bad regulations are inspiring and can bring hope to people who are suffering under the unintended consequences of poorly constructed laws, rules and regulations. Malone’s documentaries and videos are educational and informative and can be used as a practical road map for success, no matter how small or insignificant you feel.