Why Businesses Actually Want Regulation

I know this sounds a bit weird, but I think the business sector actually desires regulation and corruption. Which, of course, means that almost everything Mitt Romney says is wrong.

In Massachusetts, state law says that you cannot get treatment for glaucoma from an optometrist. You have to go to an ophthalmologist. But in all the other 49 states, you can use an optometrist if you want.

In Massachusetts, the law says that every truck that delivers wine to your door has to have a special permit. That means companies like FedEx and UPS would have to have a separate permit for every truck in their fleet if they wanted to deliver wine. Which is why they don’t deliver wine in Massachusetts.

The Massachusetts state legislature is now considering an act that would make Massachusetts one of the relatively few states in the country to license and regulate solar energy installers. It’s supported by the Boston Area Solar Energy Association.

Now, none of these laws may be bad. I’ve never met an ophthalmologist I didn’t like. I’m happy to help support the store where I buy wine, and I am a big fan of solar energy. But these examples give lie to the claim that what businesses really want is less regulation. Because businesses desire it and use highly paid lobbyists and generous campaign donations to get it all the time.

Businesses must constantly push to find an edge for themselves over the competition. Sometimes they do this by pushing for regulations that constrain access to markets, expand their patent rights, protect profits, cut the competition, and burden their brethren. When those GOP talking heads go on Fox News and tell you about how the market hates regulation, they really aren’t telling you the truth. What they mean is that businesses hate any regulation that costs them anything and protects you. But if it costs you and protects them, well, that’s fine. The real problem is you don’t have a lobbyist — and they do.

Take ophthalmologists, for instance. They might not be the kind of group you might think of as being in the center of a political food fight. But in the 2010 election cycle, the American Academy of Ophthalmology spent $1.9 million nationally in PAC money. It looks like a lot of it was spent on their feud with optometrists. Ophthalmologists and optometrists are like the Hatfields and McCoys. Ophthalmologists, apparently, believe that every dollar that an optometrist makes treating glaucoma is a dollar that comes out of an ophthalmologist’s pocket.

Thanks to effective lobbying and well-placed political donations, ophthalmologists have prevailed here in Massachusetts and have kept laws and regulations in place that cut down on the competition from optometrists. This is what business of every variety likes to do whenever they can.

Wine is another example. Massachusetts is one of the few states where you can’t get a special bottle of wine delivered to your house by FedEx or UPS. Some may try to tell you that this is because people are looking out for your well-being. But unless you were just born yesterday, you know it’s actually because Massachusetts’ liquor wholesalers are trying to protect their profit margins and burden their competition with regulations. They don’t want competition from out-of-state wineries. As the Globe recently pointed out, since prohibition:

… liquor laws in Massachusetts have tilted in favor of the only group with the money and organization to shape them — the wholesalers who distribute alcohol to bars, restaurants, and package stores.

And so it has always been. Even at the very beginning of the country, business interests pushed for laws and regulations that helped one business or geographic sector over another. The very first federal expenditure for “internal improvements” came in 1789 when the first Congress spent federal money to nationalize 12 existing lighthouses and pay for their upkeep. Six of them were in Massachusetts.

A little later, Congress got around to the first federally financed road. And of course there was a huge fight over just where it would go — just like the kind of fights we have today. The National Road, as it was known back then, was a huge money maker for some, but not for most. Just the way things are today.

So all that righteous hooey you hear about doing away with regulation, is just that. Hooey. If the government eliminated every regulation about everything, everywhere tomorrow, the day after tomorrow, there would be a line of business lobbyists waiting outside the offices of politicians, hoping to propose one little new regulation because it would give them an advantage. Like regulating Solar Panel installers will benefit established participants and make it harder for new ones to compete. Which is not necessarily bad. We get, I suppose, all the corruption we really desire.