corporate lobbying is self-destructive

it is often noted that large corporations have very advanced systems for lobbying the government to pursue policies that these corporations believe is in their own self-interest, and that this has very deleterious effects on the general well-being of the populace. what is not so often noted is the possibility that corporations are actually harming themselves by doing this.

you see, there is a great deal of government regulation out there. this regulation often prevents small businesses from expanding, but large corporations have the resources to deal with it. regulation basically serves as an anti-competitive tool to help corporations keep new competitors from coming into existence.

corporate lobbyists, on the other hand, lobby for deregulation, because they do not want the government telling their corporations what to do. this is actually the exact opposite of the corporations’ best interests, because deregulation would allow new competitors to arise. note that in perfect competition, the ideal form of capitalism, no corporation makes any profit at all, whatsoever, because the competition is so fierce and the consumers are so efficient at seeking out the best deals.

so, any corporation that lobbies government to deregulate its industry is basically trying to commit suicide. in the short-term it may get sweetheart deals with the government that only apply to it, but eventually those will be done away with in the long run. but if they succeed in getting themselves deregulated, they may relegate themselves to returning to their origins and shrinking back down into small businesses again. in the long run of course.

what keeps this from happening is that the government keeps on creating new regulations to replace the old ones that are done away with, and the corporations probably realize that much of the regulation actually helps them. case in point: the chinese government has a regulation called gb18030-2000 that requires any software sold in china to meet these outrageously difficult language requirements. this regulation is very difficult for any software maker to comply with unless they are a very large organization. microsoft is complying, of course, and they will be the main beneficiaries of this chinese government policy. even so, microsoft didn’t want this policy enacted and tried to fight it for a while, because they didn’t understand how it benefited them.

another example? enron, of course. enron did a very excellent job at lobbying the government to deregulate their industry. and what was the logical result of this outcome. oh nothing. enron just went bankrupt. that’s what you get for toying with something you don’t understand.

so the best friends of large corporations are, in fact, the liberals and green party members who hate large corporations and want to tightly regulate them. because these types of policies benefit large corporations more than anything else possibly could. if we really wanted to do the corporations in, we could simply give into their demands for deregulation, and soon enough, they would all go bankrupt from all the new competition. the institutional bureaucracy would slow down the large corporations and tie their hands by keeping them from being as profitable as the rapidly expanding new businesses, and it would be their ultimate downfall. the lesson? be careful what you wish for, because you just might get it.

so the next time you wonder about why prescription drugs are so expensive, try and remember how all the regulations of the food and drug administration really only help the large pharmaceutical corporations. but, would you really want to live in a world without drugs being regulated for safety, or without extensive research and development on new drugs? i think not. so, in a way, large corporations are a necessary evil, and we should help them out by regulating them.