Top-down regulation like this simply cannot work as well as a free market. In a free market, market forces such as supply and demand make the system self-correcting. Not so with a highly regulated market.

Regulation doesn’t respond to anything but political pressure. The loudest voices and the most politically powerful shape the rules that determines who gets what.

Far from protecting the “little guy,” regulations are often used to maximize the profits of particular interest groups. State and Federal laws set minimum prices for commodities such as milk and gasoline—ensuring that competition doesn’t drive down prices. “Prevailing wage” laws are used to ensure that the wages paid to workers on government projects are much higher than wages in the private sector—ensuring that taxpayers get the minimum value for their tax dollars.

It’s a whole lot easier to lobby for profits than compete for them. When government sets the rules, powerful interest groups often get to write them.

Markets work well—not perfectly, but well—because they are not engineered from the top-down. They are chaotic. They encourage experimentation. They allow mistakes. In markets, even the mighty can fall. Not so in regulated markets.

The belief that bigger government and more regulation are magic bullets that can correct the flaws of the marketplace is based upon the idea that politicians and bureaucrats can engineer an economy and do so for the benefit of all—pretty much the same idea that was tried under socialism. Instead what happens is that government becomes another tool of big interest groups and the rest of us are left holding the bag.