Anatomy Of A Lie

People, businesses and governments lie for all sorts of reasons. For example, lies are told to gain power, profit, votes and simple solutions. Here is a lie that accomplishes all of these for the various parties involved.

The Lie

Business owners don't want regulation, but they need to be regulated.

The Truth

Business owners almost always want more regulation, not less. Business owners fight regulations that harm them, but at the same time push for those that harm their competitors. Of course they want regulations - the ones that help them.

For example, once an industry develops to a certain point, existing players quietly call for licensing. Why? To exclude competition or make it harder for them to compete, in order to increase profits.  Politicians get votes for picking up the cause, claiming that licensing is for the public good. But is it? Do we really think it's a terrible crime to give a haircut without a license?

A carpet cleaner told me about "cutthroats" that clean too cheap. They don't have the expensive training and equipment this guy has, so they can charge less. He doesn't like that, so what is his solution to this problem of free competition? "Carpet cleaning should be regulated and carpet cleaners should be licensed." That would force the cutthroats to upgrade equipment and training. "Better for the consumer," he assured me.

Of course the "cutthroats" would either quit the business, or spend the money to comply with the new regulations, and so have to charge more. This, of course, means that the bigger players could compete more easily. That is the real point of such regulation.

Years ago I used one of the "cutthroat carpet cleaners." Did he clean my carpet as well as the more expensive companies? Absolutely not. But it was good enough, and half the price. Now I have more income and would choose a better cleaner, but I like having the choice. Still, if they ever regulate the carpet cleaning industry it will be in the name of the consumer, and the cleaners will be the ones pushing for the regulations.

Such regulations are rarely meant for the public good. "Public good," is a concept lawmakers use to hide the fact that they are creating regulations for the benefit of specific businesses and industries that have lobbied them. Politicians get votes from this lie, businesses get profits, bureaucrats get power, and the public gets simple solutions to imagined problems.

With enough money, you already have the ability to buy what you want, right? Want a higher quality bicycle or bed or house? Just pay for it. A rich man doesn't need regulations that force all businesses to comply with certain standards. He can pay for what he wants.

What about if you don't have much money? In that case such regulations take away your cheaper options, making life more difficult for you (I just wouldn't have had my carpet cleaned). So who do these regulations really benefit? Businesses, politicians, and bureaucrats.

What do we get from accepting the lie that businesses don't want regulation but we need it? For some, it is the pleasure of "punishing" businesses owners with regulations (who ultimately want them anyhow). For the rest of us, it is fewer, more expensive options. By what logic could we expect higher quality or safety without higher cost?

The consumer, then, is the one that loses most from this lie - but rarely understands what is happening. As Warren Buffet says, "If after twenty minutes at the poker table you can't tell who the patsy is, it's you."