Regulation and Behavioural Studies

The economic complexities involved when regulatory agencies set prices are compounded by political complexities. Regulatory agencies are often set up after some political crusaders have successfully launched investigations or publicity campaigns that convince the authorities to establish a permanent commission to oversee and control a monopoly or some group of firms few enough in number to be a threat to behave in collusion as if they were one monopoly. However, after a commission has been set up and its powers established, crusaders and the media tend to lose interest over the years and turn their attention to other things. Meanwhile, the firms being regulated continue to take a keen interest in the activities of the commission and to lobby the government for favorable regulations and favorable appointments of individuals to these commissions.
The net result of these asymmetrical outside interests on these agencies is that commissions set up to keep a given firm or industry within bounds, for the benefit of the consumers, often metamorphose into agencies seeking to protect the existing regulated firms from threats arising from new firms with new technology or new organizational methods.

I would take to be quite a fool any man who would make a book full of laws and statutes for an apple tree telling it how to bear apples and not thorns, when the tree is able by its own nature to do this better than the man with all his books can describe and demand.

Will one of you gentlemen tell me in what civilized country of the earth there are important government boards of control on which private interests are represented? Which of you gentlemen thinks the railroads should select members of the Interstate Commerce Commission?