How Regulation Protects Monopolies and Weakens Competition

Most Americans understand the visible harm that excessive regulation causes – higher costs and fewer choices in the marketplace. Those less familiar with Austrian economic theory may not appreciate that government regulations also actively create monopolies by shielding politically connected industries from the competitive pressures that drive innovation and spread knowledge.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

From our freedom to use or transform our private property emerges the freedom to trade it with anyone we choose. This freedom to trade inadvertently transforms mankind into a global supercomputer where private sector companies are always engaged in the process of economic competition which motivates companies to innovate and copy the innovations of competitors.

Economic competition inadvertently causes companies to cooperate in the creation and spread of superior information and subsequent socioeconomic order. Power door locks, power steering, anti-lock brakes, and countless other automotive innovations originated in one company and quickly spread to competitors due to people’s freedom to trade their life and order-sustaining wealth with the companies that provided them their cars at competitive prices.