Question

Explain the difference between free market solutions vs. government regulation solutions. What did these two concepts have to do with the Great Depression?

Answer 1

I’ve argued many times before on CD that when it comes to regulation of markets, businesses or industries, it’s never a choice between government regulation and no regulation. Rather, it’s a choice between government regulation and regulation by arguably the most ruthless, meticulous, and conscientious group of regulators imaginable: consumers.

These ruthless consumer-regulators waste no time trashing products they don’t like on websites like Amazon trashing restaurants they don’t like on Yelp for example giving bad sellers negative reviews on eBay, giving bad movies negative reviews on Rotten Tomatoes , giving contractors negative reviews on Angie’s List, giving bad Uber drivers negative reviews, giving bad taxi drivers negative reviews which that would never work, etc.

The one million companies that typically file for bankruptcy every year have also felt the wrath and strict disciplinary actions of the swarm of millions of pesky, ruthless consumer-regulators who have no tolerance for bad service, poor quality products, and high prices, and never hesitate to express their dissatisfaction when they regulate every day of the year with their regulatory certificates of approval, knows as dollar bills. When enough consumer-regulators withhold their regulatory certificates of approval from a restaurant, store or business, bankruptcy is often the inevitable collective decision of the nation’s most callous, cruel, ruthless and cold-blooded consumer-regulators.

On the other hand, the ruthless consumer-regulators also waste no time praising, endorsing and recommending the products, restaurants, movies, services, sellers, contractors and businesses they like, both by supporting them with plenty of their regulatory certificates of approval, and by giving them positive, sometimes even glowing reviews on Amazon, Yelp, Rotten Tomatoes, eBay, Angie’s List, Uber, etc.

The distinction above between regulation by government/politicians/bureaucrats versus regulation by consumer-regulators was explained exceptionally well by economist Howard Baejter in his excellent article that appeared in FEE this week titled “There’s No Such Thing as an Unregulated Market: It’s a choice between regulation by legislators or by consumers,” here’s a key excerpt: