Monopolists are perfectly impedence-matched with bureaucrats


It's really easy to understand the perspective of the companies that own the giant buildings down the street, especially when the other side is a bunch of weird new businesses that want to do stuff no one has done before.

And if you're a bureaucrat looking to make new rules, why not ask the companies that currently dominate the sector what they should be? After all, who would know better?

This is not just a case of corruption but also about what is convenient and comprehensible to a politician or civil servant. If they want something done about climate change, they have a chat with the oil companies. Obesity is a problem to be discussed with the likes of McDonald's. If anything on the internet makes a politician feel sad, from alleged copyright infringement to "the right to be forgotten", there is now a one-stop shop to sort it all out: Google.

Politicians feel this is a sensible, almost convivial, way to do business – but neither the problems in question nor the goal of vigorous competition are resolved as a result.

One has only to consider the way the financial crisis has played out. The emergency response involved propping up big institutions and ramming through mergers; hardly a long-term solution to the problem of "too big to fail". Even if smaller banks do not guarantee a more stable financial system, entrepreneurs and consumers would profit from more pluralistic competition for their business.

No policy can guarantee innovation, financial stability, sharper focus on social problems, healthier democracies, higher quality and lower prices. But assertive competition policy would improve our odds, whether through helping consumers to make empowered choices, splitting up large corporations or blocking megamergers. Such structural approaches are more effective than looking over the shoulders of giant corporations and nagging them; they should be a trusted tool of government rather than a last resort.


Monopoly is a bureaucrat's friend but a democrat's foe [Tim Harford/FT]

(Thanks, Tim!)