Regulating Regulators: Government vs. Markets

Regulation by market forces works better than government regulation. It does so because of the way each process is itself regulated, or not. Government regulatory agencies are in practice unregulated monopolies unaccountable to the public in any meaningful way. By contrast, the process whereby market forces regulate industries is itself effectively regulated by market forces.

To regulate is to make regular and orderly, to hold to a standard, to control according to rule, as a thermostat regulates the temperature in a building. Market forces do this continuously as competing businesses offer what they hope will be good value, customers choose among the various offerings, competing businesses react to those customer choices, and then customers choose again. That process is the market’s regulator.

Find the article at Cato.