In Markets We Trust

Al Abedi, Class of 2020

Al Abedi, Class of 2020

Should Google and Facebook be regulated asked Ran Harnevo - former President at AOL – of a Booth class. For ninety minutes, he’d explained that Google and Facebook had become too large and that their size had social implications (e.g. fake news). The class was mostly unmoved by his argument.

Such attitudes towards regulation are mirrored in broader society: since the Reagan Revolution Americans have been steadily convinced that government is a problem in and of itself. Perhaps influenced by Reagan’s comment that “the nine most terrifying words in the English language are ‘I’m from the government and I’m here to help’ ”, Americans appear to be hard wired to view all government actions with disdain.

Consequently deregulation championed across the political spectrum. This attitude ignores the potentially beneficial impact of effective regulation and the unintended consequences deregulation may create. Consider the FCC’s Fairness Doctrine (abolished under Reagan in 1987). The Fairness Doctrine required holders of broadcast licenses to present controversial and important issues in a balanced manner. It’s removal spawned partisan broadcast outlets, as broadcasters such as Fox News and MSNBC were now free to air brazenly one-sided programming. These news channels profit-maximizing strategy? Serving a daily diet of outrage and anger with stories that that cocoon viewers into an echo chamber long before Facebook emerged. Over time, Fox News exploited its viewers’ biases such that its fans have come to think of their favorite news channel as an objective news outlet.

Over time, Fox viewers have come to believe in a non-existent reality. In this reality a harmless fist-bump between the Obamas was a “terrorist fist jab”, Barack is a Kenyan-born Muslim coming for viewers’ guns, Jesus and Santa are white, climate change is a hoax, and Americans aren't "pure" like Swedes because they keep marrying "other species and other ethnics". When half the population hold beliefs that hold no basis in fact, it becomes impossible to move forward as a country. With a poisoned public discourse, two factions that occupy different spheres of truth have emerged.

Regulation is not the answer to all economic ills but done right serves a key tenet of capitalism: competitive markets. Sadly, regulatory capture in the U.S. has facilitated a wave of corporate consolidation that has restructured the American economy, concentrated industries and damaged competition in the process. Consumers are consequently confronted with reduced choice and higher prices across telecoms, pay TV, airlines, drug stores, and many other industries. Meanwhile entrepreneurship is at a forty-year low – as it’s becoming increasingly difficult to take on established corporations.

Effective regulation could stem such alarming trends. But as long as Americans remain preternaturally predisposed to think of government as incompetent, it’s hard to imagine an environment where regulators will have the mettle to take on corporate behemoths. We shouldn’t have to wait for some hotshot district attorney building his resume for a gubernatorial campaign to challenge such unfettered corporate power and return capitalism to its true competitive roots.