The Corner

Businesses Don’t Like Competition

Last week, I wrote a piece for Bloomberg about how businesses do not like competition and have been using the government for years to impose rules and regulations on their competitors to hurt them or to get special favors and tax treatments.

Think about it. Competition is good for consumers because it keeps prices low while increasing the quality and choices of products and services. Yet competition is hard work for businesses. They have to fight for customers by innovating and evolving in ways that consumers demand.

To avoid the gritty work of fighting it out in a free market, organized private interests — such as Louisiana’s licensed funeral directors — lobby the government for special regulations, preferential tax treatment and laws that keep out competition. They lobby lawmakers to constrain the same free markets in which they originally achieved success.

This practice has been around for as long as there have been businesses and governments.

I got two kinds of feedback. First, many business owners wrote to say that I was right, that things were worse than I thought, or that since the government was there to distribute favors, why not try to benefit from them, since others would if they didn’t? Second, lots of people wrote that it was a statement about how free markets are. Of course, that’s not what I think my piece shows. Rather, it is a statement on how we don’t have free markets in this country because of the unhealthy marriage between government and businesses.

Here is a good Reason TV video that illustrates perfectly this unhealthy union. The LAPD has been hassling food carts recently. Why? Because they are competition to restaurants and those guys don’t like it.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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