Imagine, it’s 1876 and Alexander Graham Bell has just invented the telephone, when he gets a call from the government letting him know that the state legislature has voted to enact market regulations that stop the device from being sold.
After all, the phone could seriously disrupt the telegraph market and the companies that run that industry, so naturally government needs to step in. Coincidently, telegraph operators just happen to be some of the largest campaign contributors to the same elected officials. Looking back on this, it sounds a bit ridiculous, but in small ways it happens almost every day in Mississippi.
Current market operators work with legislators and regulators to put in place laws and regulations that make it difficult to enter a given market, whether it be eyebrow threading, liquor sales, taxi services, or other industries. Prices stay high, the operators face less competition, and ultimately the average Mississippian loses, having been denied the lower prices and new technology consistently brought forth by competition and enterprising entrepreneurs. This competition is indeed a good thing, and government shouldn’t stand in the way of the market. After all, why should the state decide who wins and who loses?
This issue has been especially pronounced lately during debates on the issue of alcohol freedom. Over the course of the legislative session, a variety of bills have been introduced that would further alcohol freedom. From wine in grocery stores to the direct shipment of alcohol to your doorstep, many good bills have been introduced. Unfortunately, not all of them have made it out of committee, and an anti-competitive spirit is partially to blame.
Naysayers suggest that wine sales in grocery stores would hinder the success of liquor stores. But the major reason liquor stores would face trouble competing with larger chains would be because of the other burdensome regulations that have been placed on these business owners by government. This includes limiting of what they can sell, and the blocking of their ability to own more than one liquor store. Looking around the country, other states that allow for the sale of wine in grocery stores have no noticeable drought in liquor stores, so the fears seem a bit unfounded. The grocery stores and liquor stores typically cater to different markets in their sales, and thus both consistently survive.
In many ways, your ability to purchase wine from grocery stores has been delayed for at least another year because people did not want to have to compete. If a business can’t compete, then it should lose on the market, not in the hall of the legislature, this is how we encourage innovation. In this way, capitalism is truly the closest thing we have to direct democracy, as every individual has the power to vote with a dollar that represents an equal value no matter the holder.
The question is indeed worth asking, should government have stepped in to protect the pony express, the horse drawn carriage, or the telegraph? These might be larger examples, but the same principle applies in theory. When the legislature drafts laws and regulations that discourage competition and protect existing operators on the market, it discourages new businesses from entering the state.
Each lost business represents jobs that never had the chance to come into existence because an entrepreneur was blocked from potential success by government, and that’s a tragedy.