Public choice then came along and provided analyses of the behavior of persons acting politically, whether voters, politicians, or bureaucrats. These analyses exposed the essentially false comparisons that were then informing so much of both scientific and public opinion. In a very real sense, public choice became a set of theories of governmental failures, as an offset to the theories of market failures that had previously emerged from theoretical welfare economics. Or, as I put it in the title of a lecture in Vienna in 1978, public choice may be summarised by the three-word description, ‘politics without romance.’
James Buchanan
Durable social regulation evolves when it is demanded by both of two distinctly different groups. \Baptists\ point to the moral high ground and give vital and vocal endorsement of laudable public benefits promised by a desired regulation. Baptists flourish when their moral message forms a visible foundation for political action. \Bootleggers\ are much less visible but no less vital. Bootleggers, who expect to profit from the very regulatory restrictions desired by Baptists, grease the political machinery with some of their expected proceeds. They are simply in it for the money.
Bruce Yandle
Paging Dr. Gottlieb. Dr. Gottlieb to the pharma trough. Dr. Gottlieb to the pharma trough.
The regulatory process, when viewed through this unsentimental lens, resembles less a noble pursuit of the public good than a complex negotiation among competing interest groups. Firms manipulate regulations to disadvantage competitors, consumers organize to demand lower prices or product changes, and regulators pursue institutional interests in expanded influence and resources. The abstract goals of economic efficiency or internalized externalities—beloved by textbook economists—serve none of these interests, so they rarely become a priority.
Let’s not forget the net neutrality debates that have raged for over a decade. Internet service providers, content companies, and consumer advocates each wrapped their positions in noble rhetoric about innovation and fairness, while pursuing their obvious financial interests.
Big Tech stood to benefit at the expense of Big Cable’s customers.
The uncomfortable truth is that our regulatory apparatus, whatever its original intentions, has evolved into something its founders would barely recognize: a sophisticated system for converting political influence into economic advantage, wrapped in the comforting language of protection.
Understanding these dynamics is the first step toward developing institutions that might actually serve their stated purposes—or at least toward maintaining a healthy skepticism about their efficacy.