Progressives laudably seek to oppose injustice by deploying government power as a countervailing force against the imagined oppressive and exploitative tendencies of market institutions. Yet it seems that time and again market institutions find ways to use the government’s regulatory and insurer-of-last-resort functions as countervailing forces against their competitors and, in the end, against the very public these functions were meant to protect.
We are constantly exploited by the tools meant to foil our exploitation. For a progressive to acknowledge as much is tantamount to abandoning progressivism.
Kaus’s proposed reforms can’t hurt. But the mindset has to change. Conservatives will have to figure out that being “pro business” and being “pro market” and “pro freedom” will often be in opposition. Big Business wants a regulatory state to insulate it from competition. That is rational self-interest. And it is anti-market.
Corporate capture of state power is the inevitable and (should be) well-known consequence of creating state power in the first place. Edmund Burke and Adam Smith and Thomas Jefferson warned about this in the late 1700s, and the liberal thinkers throughout the 19th Century were acutely aware of this problem. (See, e.g., this book) The Founders knew this, and built a central government of limited powers for exactly this reason, with the mercantilist, politically-connected monopolies of Britain very much in mind. In the mid-20th Century, Mancur Olson, James Buchanan and George Stigler, among many others, documented and demonstrated that the regulatory state will be in the hands of the supposedly regulated parties based solely on the incentives and knowledge of all the parties.
Regulatory capture is folk wisdom, not arcane knowledge. It is inevitable.
No one can honestly smack their forehead and say “d’oh!”
There is no excuse for being surprised by this.
UPDATE: Our Nomenklatura, Via Instapundit.