A reader quotes Jason Brennan:
When you create complicated tax codes, complicated regulatory regimes, and complicated licensing rules, these regulations naturally select for larger and larger corporations. We told you that would happen. Of course, these increasingly large corporations then capture these rules, codes, and regulations to disadvantage their competitors and exploit the rest of us.
Yeah, that makes sense, because back in the day Standard Oil, US Steel, Southern Pacific Railroad, and J.P. Morgan were tiny companies that had no political influence and allowed free and open competition to flourish.
Another is more straightforward:
Mr. Brennan's open letter to the moderate left is an example of why libertarians are often referred to as "glibertarians."
Mr. Brennan's argument is that the moderate left caused today's "run-away corporatism" and "crony capitalism," in a process known to public choice economists as "regulatory capture". The idea is that state regulatory agencies are often "captured" by the industries they are formed to regulate, because the industries have a strong economic interest in controlling their own regulation. In such event, the argument goes, government regulation is worse than no regulation at all, because now the industry-controlled regulatory process has the force of law.
Mr. Brennan's innovation is to conclude that not only are regulatory agencies susceptible to capture by large corporations, but regulatory agencies actually create large corporations, because large corporations have a competitive advantage over smaller corporations when it comes to exploiting government regulation.
Mr. Brennan falsely claims that his conclusion is required by public choice economics. Although public choice economics has identified the regulatory capture problem, nothing about public choice economics requires the conclusion that the only alternative to regulatory capture (which public choice economics would consider a government failure) is no regulation at all.
Mr. Brennan's argument is also deeply ahistorical. For example, the Interstate Commerce Commission, which was formed in 1887 to regulate the railroads run by "robber barons", was (as Milton Friedman argued) soon captured by the very railroads that it was formed to regulate. However, it would be absurd to argue that the ICC created the robber barons.
In the end, Mr. Brennan's argument is just an expression of his libertarian bias, and does not follow from any serious modern theory of economics.
The Dish 