mises – The Marginal Non-hermit

Visa and Mastercard have really decided to get censorious recently, taking aim at various works of fiction for not-safe-for-work content on certain sites, despite the fact that they handle NSFW transactions for other sites all the time.

Various personalities around the internet have chimed in, and one of them is popular streamer Asmongold. In his video “Steam is under attack…” he offers a simple, but dangerous solution: Regulate!

This is, of course, a very common and easy response. Why wouldn’t it work? There are a ton of reasons.

Regulations are typically written by the biggest companies in a field. This regulatory capture results in a soft legal monopoly that generally means that regulations are written at the expense of newcomers to the market, and not established firms.
Even if regulations are written in good faith, they tend to have unintended consequences that create a demand for further regulations.
- Mises put it this way, regarding price controls:
  “Economics does not say that isolated government interference with the prices of only one commodity or a few commodities is unfair, bad, or unfeasible. It says that such interference produces results contrary to its purpose, that it makes conditions worse, not better, from the point of view of the government and those backing its interference.
- Rothbard was even stronger in his condemnation:
  “…every coercive intervention in human affairs brings about further problems that call for the choice; repeal the initial intervention or add another one.”
  In short, reacting to a problem with a demand for intervention is a path toward more and more government interference against the people.
Regulation generally makes it harder and harder for new competitors to arrive, which has some issues:
- Regulatory burden rises; the necessity for reporting, forms, and bureaucrats increases. Company bureaucrats of the established firms build relationships with government bureaucrats, and these relationships tend to lead to unfair application of regulations.
- More requirements increases the capital and risk required to attempt to start a competitor. It raises the bar over and over again for what it takes to become an agent of change, until only the ten or fifteen richest men control everything. What if they decide to collude then?
- Asmongold even mentions regulatory burden in another segment, which means he knows about it but is failing to make the connection.
Enforcement of regulations can be inconsistent, either accidentally or deliberately. Regulators can choose to ignore what’s on the books of their friend companies, and enforce the regulations as harshly as possible against upstarts. This is frequently referred to as anarcho-tyranny, in which laws exist but are selectively enforced on one group, while other groups are encouraged to break the law.
Finally, regulatory systems are ripe for hijacking by ideologues. Moral regulations create a push for ever more stringent moral requirements. Communists can point at failed regulations as a reason to nationalize one industry, and then point at that failure as a reason to nationalize more.

In summary, as regulations grow, so grows the perception that only the super-rich can get anything done. In a common metaphor, it is represented by a ladder with a bunch of missing rungs. Those on top ensure that no one else can rise to compete. A good example is the rich lobbying for more income taxes; they already have theirs.

The answer to problems like this is instead to look for the regulations that prevent a competitor from arising, and remove those. That way, rather than simply putting more money in Visa executives’ pockets, the market can knock them down a few pegs and a few other competitors without censorious aspirations can get rich instead.

This video is available on Odysee, YouTube, and BitChute.

References:

Mises quote from Human Action, page 758
(Intro quote also from Human Action, page 851)
https://mises.org/library/book/human-action

Rothbard quote from Man, Economy, and State, page 1366
https://mises.org/library/book/man-economy-and-state-power-and-market

Intro music by Sonican, courtesy Pixabay
https://pixabay.com/users/sonican-38947841/

Thumbnail image by Efraimstochter, courtesy Unsplash
https://pixabay.com/users/efraimstochter-12351/