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Friendly regulations 

I had to cut this paragraph out of a business report I was writing this week:

Furthermore, the regulatory trend across all markets has been -- and will continue to be -- toward voluntary, market-driven provisions rather than mandates. Regulators increasingly understand the value of market incentives. From the perspective of both politics and economic efficiency, they would much rather achieve their [deleted] goals by contributing to the business case for enhancing [deleted] rather than by issuing onerous new regulations.

My clients, some smart businesspeople, didn't get it. Rather than encouraging corporations to respond to market incentives, they substituted some language warning them to try to forestall "punitive" regulations.

Now and then I want to believe that the President is a dedicated libertarian. He wants to apply market forces to come up with more efficient solutions. That's why he wants to privatize Social Security and overhaul regulations on the environment, worker safety, and a host of other areas.

But if that's so, why don't the regulatees get it? Shouldn't they be the first to jump on board, to say "Thank God the government is finally being run like a business"? They should be saying, "Wow, an incentive to do the right thing! What a smart bunch of regulators!"

But instead they're saying, "What a bunch of weaklings!" As a group (obviously I'm generalizing now), they have no interest in working together to achieve common goals. They just want to bribe or browbeat politicians until regulation ceases to exist.

This has to be seen as a huge defeat for libertarian ideals. Much as we might want to like to believe that corporations work strictly on economic logic, the fact is that they don't. (After all, individuals don't either, and corporations are made up of individuals.) The oppositional nature of government regulation is so ingrained that it is impossible to change.

I don't mean to be shrilly anticorporate here. I just mean to point out that we are all, always, tempted to act like bullies. The way to respond to a bully is not to give him incentives. It's to show him that you are stronger.

The President knows how to apply such philosophies abroad. Why can't he do it at home?

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