Government regulation that purports to protect ordinary consumers generally ends up protecting large incumbents because government regulation establishes high stickiness for incumbents, vs new entrants that are unequipped to handle regulatory load. Large incumbents in any industry are well aware of this, so they play a 2-sided game: simultaneously complaining about and embracing regulation which ultimately leads to regulatory capture–intertwined regulators and incumbents. Crazy high barriers to entry.

Therefore Dodd Frank equals Big Banks Protection Act of 2010. Raised barriers to new banks. Result: Big banks more powerful than ever. Sarbanes Oxley = Big Companies Protection Act of 2002. Raised barriers to new public companies. Result: Number of public companies fell off a cliff.

Later, everyone wonders why there’s no new competition, incumbents are more powerful than ever, then calls for yet more protective regulation. Then total surprise that regulated sectors of economy languish while more competitive sectors race ahead. Regular consumers are the victims. It’s utterly predictable, yet surprise every single time. Triumph of hope over experience–brought to you by the Good Intentions Paving Co.


  1. To be pro-consumer is generally to be pro-competition, pro-innovation, anti-monopoly/oligopoly, and anti-regulation.1
  2. The best answer to markets that seem to need regulation is generally to instead create more competition.2
  3. A one time government antitrust strike will generally be far more pro-consumer than an ongoing regulatory regime.3

Marc Andreessen’s tweet regarding government regulation and his 11 tweets that followed:


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