Hey! Everybody this is Alex Merced and this is going to be the fifth economic discussion and this one is going to be about regulation because everybody always thinks regulation is for the good of the people that is going to protect people keep the economy strong, make jobs, but it is quite the opposite. Now one of the most fundamental things about economics is that any business in a free market is acceptable to competition. So if the market demands something, a competitor will fill that demand putting pressure on its competitors in order to supply that same -- to fulfill that same demand.
So what happens with regulation is that it limits competition due to raising the barrier to entry. So, when you limit competition big corporations have less people that they have to put pressure on them to change their business model in order to reflect demand. So in essence when you have regulation you are given more power to large corporations. To illustrate the story, here we go, in a long fashion you have a large corporation, the large corporation does unethical things. So what happens that the Government puts regulations on to prevent these sorts of things? So, but the large corporation having large profits has the money in order to take the new equipment and meet up the standards of the regulation.
But its smaller competitors do not and these smaller competitors are now slowly get put out of business. So, what happens is that these large corporations -- so a lot of jobs get lost from all those corporations being shut down, usually not being able to compete due to increased cost. So you see job losses, so you are going to see job losses. But then what happens is that since there is less jobs in this industry there is less pressure on wages to go up since they are not competing, so you don't have so many companies to try to compete for the best, for the most highly skilled labour. So demand for the highly skilled labour compared to the supply is now thrown off balance, so wages get pushed down due to regulations. So that happens due to the knocking out of competition.
So, then what happens is that well now this company now this large corporation, now has more power, larger profits due to larger dominance over the industry which can then lead to being able to invest more interest in the money and having lobbyist groups sit there and shape the laws more to create exceptions that are set up in a way to benefit the large corporation and still keep out small businesses. This is why we see a lot of exceptions and loss that are buying this away sort of where if your company is big, you are exception at certain laws and the lot of that has to do with regulations and lot of ot has to do just because since we freeze up the smaller guy due to regulations, the bigger guy ends up getting stronger.
So in the end most regulations just feed into the corporate system that we have functioning right now, what we need to be striving back towards is Capitalism. We have not had a Capitalism system in the US for quite a while due to the rise of the power and corporatism. Again corporations can only have as much power over the country as a Government does because if the Government -- because the only way they can control the companies is through the Government. So the Government is powerful enough or at least that the power isn't concentrated enough that is affordable for corporations lobby and stuff like that, then you don't have a problem. But as soon as you concentrate power in the Federal level it makes it easier for the lobby that be done because it is smaller group of individual that needs to be lobbied.
And that is part of why regulation is bad. And why regulation gets pushed and why regulation gets through? But really what it does, it limits competition, it doesn't accomplish that would have mean to them the positive affects that it means to and you lose jobs and those jobs that still stick around wages go down. Now last I checked this is not -- that is not the kind of thing that is happening in the world. So, to me as far as Federal regulation, there shouldn't be any. Should there not be self-organizations? There should be. There is a public demand for certain level of oversight over things. That public demand can be certain enough if people -- if all these companies in the industry all feed into a self regulatory agency is run by -- that runs separately, but funded by the industry, one it creates a separate regulatory brand that perhaps increase consumer confidence and many times can increase the bottom line for many of these industries.
So you see this in the marketing industry with I think the better business bureau, I don't think or I can know exactly what is the DSRO for the marketing industry. And you see that the other industries that have their own SRO sub-regulatory organizations and they can be created and I am not saying that there shouldn't be no regulation; I am just saying that there should be better regulation. The regulation should be voluntary and setup third parties just because third parties are less -- because third parties can't manipulate the laws. They can't change laws in order to benefit big corporations. All they can do is regulate those who volunteer that part of the organization and those who decide not to follow the rules of organizations will get excluded of the organizations and not get the benefits of being inside the organizations SROs have a lot of organizations such as networking and joint advertising because you see in trade organizations, like in the Got Milk commercials who is actually paid by a variety of companies within the milk industry in one organization that kind of is a trade organization.
Again demand, the consumer demands for certain changes will put pressure on these organizations to regulate themselves and I am sure it will be activist group of consumer who will take of care of that. So those consumers -- you see in consumer reports and people online put in reviews of such products, it will happen. Again it takes active, intelligent, pro-act of consumers in order to reach that point, but as long as we expect we only be dependent on Government to take care of these problems people won't necessarily feel the need to be proactive, intelligent and try to step up with some of these problems.
Again in order to make freedom and maintain a strong economy is going to be necessary that we expect people to step up and expect more from our citizens than the minimum. So, speaking from where we need to be and how we can get there, those are my sense. So that is my sense on regulation.
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