May 12, 2014

Consumers Are the Best Regulators

Antony Davies

Senior Affiliated Scholar

That’s the power of regulation by consumers. It is stronger than government regulation and, more importantly, it targets the right things for the right reasons. Consumer regulation is controlled by people who are directly affected making choices for themselves.

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My wife makes beer. Very good beer. Years ago, we talked about starting what we called a “picobrewery” – something smaller than a microbrewery, like a hobby with a positive cash flow. We figured that for a few thousand dollars, we could create a small business that would provide part-time employment for several people, generate a unique product, and maybe one day would grow into something more substantial.

What we didn’t count on was regulation. No one was more concerned about our customers than us – not just because we’d be financially liable if our product harmed someone, but also out of a human concern. Our customers were also our neighbors and friends. Yet here was the government telling us, through rules written by people who had never brewed beer, what to do to protect customers whom those people had never met and for whom they held no responsibility.

When we discovered that complying with regulations would triple our startup costs while providing no significant benefit to anyone other than people paid to serve as government inspectors, we gave up our dream. Maybe our little business would have grown into something large that employed many people. Maybe not. The point is that we’ll never know because we never got the chance to take a chance.

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