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'In Most Industries, Regulation Tends To Prevent Competition' 261

Elad Gil, writing in a blog post: In most industries, regulation prevents competition. This famous chart of prices over time reflects how highly regulated industries (healthcare, education, energy) have their costs driven up over time, while less regulated industries (clothing, software, toys) drop costs dramatically over time. (Please note I do not believe these are inflation adjusted - so 60-70% may be "break even" pricing inflation adjusted.)

Regulation favors incumbents in two ways. First, it increase the cost of entering a market, in some cases dramatically. The high cost of clinical trials and the extra hurdles put in place to launch a drug are good examples of this. A must-watch video is this one with Paul Janssen, one of the giants of pharma, in which he states that the vast majority of drug development budgets are wasted on tests imposed by regulators which "has little to do with actual research or actual development." This is a partial explanation for why (outside of Moderna, an accident of COVID), no $40B+ market cap new biopharma company has been launched in almost 40 years (despite healthcare being 20% of US GDP).

Secondly, regulation favors incumbents via something known as "regulatory capture." In regulatory capture, the regulators become beholden to a specific industry lobby or group -- for example by receiving jobs in the industry after working as a regulator, or via specific forms of lobbying. There becomes a strong incentive to "play nice" with the incumbents by regulators and to bias regulations their way, in order to get favors later in life.
Additional resource: All-In Summit: Bill Gurley Presents 2,851 Miles.
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'In Most Industries, Regulation Tends To Prevent Competition'

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  • by jacks smirking reven ( 909048 ) on Monday September 18, 2023 @11:49AM (#63857850)

    I am sure the man in charge of a large venture capital firm invested into AI products is giving us the totally fair interpretation on regulation.

    Also we already have economic theories about things like healthcare and education (and most of the things on his chart) and it's not just regulation, it's that these industries have limits on how much technology can increase productivity, also known as the Baumol Effect or Baumols Cost Disease [wikipedia.org]

    Also one can easily make the argument (imo correctly) that almost all other developed nations regulate their healthcare systems more than the US and in fact their systems operate much cheaper, the US having the highest costs-per-capita by far. Healthcare is walking talking market failure on every level, it simply cannot operate via market principles if the goal in fact is to serve the most people and reduce the most amount of suffering.

    • by Registered Coward v2 ( 447531 ) on Monday September 18, 2023 @12:04PM (#63857904)

      I am sure the man in charge of a large venture capital firm invested into AI products is giving us the totally fair interpretation on regulation.

      It's not exactly a new idea, Stigler wrote about in the 70's.

      Also one can easily make the argument (imo correctly) that almost all other developed nations regulate their healthcare systems more than the US and in fact their systems operate much cheaper, the US having the highest costs-per-capita by far. Healthcare is walking talking market failure on every level, it simply cannot operate via market principles if the goal in fact is to serve the most people and reduce the most amount of suffering.

      Market forces act on all systems, just with different impact. In some European countries, universal healthcare often means waiting for routine care, and in some private clinics have sprung up to provide on demand access for those that are willing to pay.healthcare reform is a complex topic, and to fix it you need to change a lot of things; from drug pricing, insurance and payment models, physician education to by whom and how care is delivered. That takes on a lot of special interests; drug companies want high drug prices in the us to support R&D, MDs want to be the gatekeepers for care, legal liability, etc.

      • The US is stuck in limbo. The free market capitalists believe in minimal regulation. The socialists believe in government ran health care.

        What we get is a hybrid which doesn't work. In the US, the regulations come from the same entities that are attempting to maximize profits. The incentives are wrong.

        I believe the US needs two completely independent systems with their own set of providers. One exclusively paid for by the public sector and the other exclusively paid for by the private. Keep the private one

        • The thing with 2 independent systems is it creates a large amount of inefficiency, there are only so many health providers, doctors, clinics etc. Also medical care is very susceptible to a consumer lack of knowledge program, an unregulated doctor can sell people on wrong or unnecessary procedures for money because people are not doctors. We have a pretty much unregulated supplements industry in the US and it is functionally full of fake products with mountains of dubious claims.

          What you describing is just

          • by Sique ( 173459 )
            The thing is, that the U.S. health care system is already so inefficient, it can't get any worse.

            In Germany, it works like this: The government defines the minimum requirement for an health insurance plan and its implementation within the healthcare system. Any insurer is allowed to offer plans which cover at least this legal minimum. Those regulated contracts are called "insurances according to law". People below a certain treshold of income are required to buy an insurance plan according to law, but are

            • Ahh ok are you in Germany? I have read a lot of things about the German healthcare system in that it seems like a good candidate to phase the US model over to because it does a good job of providing total coverage but still allows a private insurance option for those who want it. I believe though that the majority of insurers are also non-profit, is that correct? I think that's a good requirement to keep the incentives aligned on good health outcomes.

      • by Darinbob ( 1142669 ) on Monday September 18, 2023 @12:36PM (#63858006)

        This happens in the US too. I have great health care with an HMO; cheap drugs, quick access, a one stop location for everything. My mother has a medicare plan with cheap drugs too; but extremely slow responses for specialties. She can see the local doctor easily, but it's been months to get some basic stuff done like radiology. Her doctor makes a referral and it may be a month before there's phone call to set up an appointment.

        The US media gets a lot of click bait stories about how horrific health care is in Canada or the EU, but I hear tons of great word of mouth stories about how great they are. Meanwhile there are tons of word of mouth stories about how the US system is flailing - it has great health care if you're rich or if you have an expensive employer paid insurance plan, but overall it is not great especially if you're poor or outside of a large city. Media points to things like the Mayo Clinic as great health care and imply that this is the average when it's an extreme outlier.

        • For sure no country has a perfect health care system, Canada and the European countries have their issues but I think the real key though is even with those problems I don't think anybody who lives in any of those countries would want to shift their system over to what the US does because we get the worst of both; we pay the most by a pretty large margin and it's not like we get the outcomes, if anything life expectancy is declining in the US. We do have good cancer survival rates but its not that far ahea

          • A lot of US medicine is reactive, especially on the insurance sice - you get a problem first then they try to fix it. It is cheaper and more effective, when possible, to prevent the problems before they happen.

            • For sure for sure not enough people get regular checkups and we also suffer from delayed care.

              It's something of a non-issue in other countries but in the US I know myself and many others that when something is feeling wrong or we think it's time to see a doctor the first thought is "how am i gonna pay for this" even with insurance.

        • Why not take a look at the Wikipedia "List of countries by total health expenditure per capita": https://en.wikipedia.org/wiki/... [wikipedia.org]

          In first place 2022 is the US with a spending of 12,555$ per capita of and in second place Switzerland with 8,049$. 2022 GDP per capita is 76,398.6$ in the USA, and 92,101.5$ in Switzerland according to the World Bank.
    • I am sure the man in charge of a large venture capital firm ... is giving us the totally fair interpretation on regulation.

      That's really all you needed to say.

    • I'd say it's pretty obvious that in most cases, any regulation will reduce competition to some degree. What's also obvious is there are better regulations and worse regulations. There are regulations that achieve a stated goal with a little impact as possible, and those that don't even achieve their goal while massively impacting competition. We would prefer more of the former and less of the latter regulations.

      The key is whether the purpose of the regulation is valuable, and whether the regulation is reaso

      • Absolutely, I think the conservatives/libertarians are spot on when they talk about the artificial rationing of residencies and doctors by the AMA, that is reduces supply and increases costs. Can totally agree we should uncap that but still keep requirements for doctors to be licensed appropriately.

    • that almost all other developed nations regulate their healthcare systems more than the US

      Actually untrue in most respects. What the USA has a problem with is poor regulation though. Most other countries have regulations more focused on affordability. The US doesn't have that.

      I like to say that the US has a careful combination of the worst aspects of free market and government controlled industry.

      As in, we'd be better off if the healthcare market was a more reasonably "free" market OR if it was more tightly controlled, like with a single payer healthcare system.

      We've discovered this ourselves

      • The things with plastic surgery, lasik and such is that those are by their name, elective procedures. The consumer always in that case has the option to walk away and not purchase which is a key component of a competitive market, if prices are too high consumers will simply not purchase. With most healthcare that does not exist, the consumer has no real choice, nor do they have the knowledge to effectively judge their options. So many market failure options happening at once.

        I would also agree on radical

  • Riiight (Score:5, Insightful)

    by somethingbardon-nova ( 10502386 ) on Monday September 18, 2023 @11:50AM (#63857854)
    Elad Gil Founder: MixerLabs (Twitter), Color Health Investor: Airbnb, Airtable, Anduril, Coinbase, dbt Labs, Deel, Figma, Gitlab, Gusto, Instacart, Notion, Pinterest, Retool, Rippling, Samsara, Square, Stripe, TripActions, etc Writes a blog post about how regulation stifles competition while also being the founder of several companies who are facing issues with regulatory bodies. Yep this is absolutely not biased!
    • Precisely. This is more telling about the mindset of a certain kind of executive (sadly not an infrequent mindset) than it is about anything economic.

      In addition to the obvious product quality issues, another problem that happens in lightly regulated industries is that companies just pull out or disappear with little notice. It's one thing if you can no longer get your favorite pair of designer jeans, and quite another if an airplane part manufacturer hangs it up.

      Regulation is a blunt instrument for sure,

      • Re: (Score:3, Insightful)

        by toxonix ( 1793960 )
        "Elad Gil is a serial entrepreneur" That's pretty much all you need to know about the guy. Color Health is definitely a "buy me" business riding on the popular wave of genetic testing to see if it breaks out into cash cow territory. They're making money on genetic testing while shifting all the heavy work on the patient's doctor. "Ask your doctor if genetic testing is right for you" - he/she will probably tell you it's still a waste of money, and there's no magic Star Trek medical tricorder yet. The reason
    • by OldMugwump ( 4760237 ) on Monday September 18, 2023 @12:07PM (#63857910) Homepage

      Most if not all of those companies were small startups when he invested.

      But even if he's biased, that doesn't make him wrong. Judge the facts and argument, not the arguer.

  • by Joe_Dragon ( 2206452 ) on Monday September 18, 2023 @11:51AM (#63857856)

    out side the usa healthcare costs are low with reg.
    But the USA has to foot the bill for others to get cheap drugs.

    • I can't quite tell if you meant that ironically, but the USA could absolutely have drugs at the same price as everywhere else. There's just this weird institutional deference to grifters and liars so if some guy raises the price of insulin, the government has nothing to say about it because someone is getting rich off of it. It's wild.

    • by thegarbz ( 1787294 ) on Monday September 18, 2023 @04:43PM (#63858810)

      But the USA has to foot the bill for others to get cheap drugs.

      Not really. That's good pharma propaganda though. A large portion of pharma research is done by public institutions. A large portion is done outside the USA by government funding from others? Drugs are insanely cheap to manufacture. The only difference in the USA is the regulations that allow insane pricing for drugs where companies can literally make up any price they want combined with laws that intentionally prevent competition.

      Other countries negotiate pricing contracts on a national level that means pharma companies can't charge your desperate mother her entire life savings for her life saving medication.

      It's sad when you have to sell things to people who have some power as opposed to lining your pockets with the desperate who have no choice.

  • Hmm (Score:3, Interesting)

    by Anonymous Coward on Monday September 18, 2023 @11:53AM (#63857860)

    "the vast majority of drug development budgets are wasted on tests imposed by regulators"

    I'm not sure that testing drugs thoroughly before unleashing them on the public can be characterised as a waste, but then I'm not a pharma bro.

    "This is a partial explanation for why (outside of Moderna, an accident of COVID), no $40B+ market cap new biopharma company has been launched in almost 40 years."

    Not because any vaguely promising startup gets bought out by big pharma before it can get big enough to compete, then?

  • by alfabravoteam ( 5990194 ) on Monday September 18, 2023 @11:54AM (#63857862)
    In fact, places like UK show that deregulation following privatization has brought price on utilities way up, while the companies themselves have only provided dividends to stakeholders while being deep in debt (billions in debt), a debt that is likely to be paid by customers. The logical fallacy there is strawman. Problem is not regulation (as shown with tenants and landlords, among many examples) but the lobbying. Corrupting elected officers to be lenient with incumbents is corruption, not a fault on regulation. Avoid conflicts of interest on regulators, that's it. Embroiden sponsors on legislator's shirts so we know who are they caring about :)
    • by Moryath ( 553296 )

      To follow this up, look at what Texas's "deregulation" did to electric prices - it jacked up the prices on homeowners to the tune of $28 billion over what market rates were elsewhere for electricity as a utility. [wsj.com] The wasted money goes to the middlemen and to bribes that feed the republican party. [kut.org]

      Every time conservatives tout "deregulation" they prove they're a bunch of lying scam artists.

    • In the US if a drug price goes up, the insurance companies will just pay the higher price while raising their own prices or cutting back elsewhere. US health insurance companies are extremely quick to deny coverage when they can. Sure, the US has the best health care, the problem is that most US residents don't have access to it.

    • In fact, places like UK show that deregulation following privatization has brought price on utilities way up

      The statement itself is based on facts, but it is incomplete. The issue is in most industries OVERregulation drives prices up. The opposite to overregulation is sane regulation, it's not underregulation. The latter can also drive prices up, as in the UK.

  • Why is this news? (Score:4, Insightful)

    by guruevi ( 827432 ) on Monday September 18, 2023 @11:54AM (#63857864)

    This is Economics 101, if you increase the barrier to entry into an open market, less people will be able to enter the market. Pure genius.

    We've only known this for a few thousands of years. The ancient greeks had already developed legal constraints, specifically on trade by their executive agencies because they saw the need for a flourishing economy and the effect of an overbearing state apparatus (whether through taxation or other means) had.

    • the need for a flourishing economy and the effect of an overbearing state apparatus

      There's also the opposite problem (an "underbearing" state apparatus?) where consumer confidence is rightly low and the economy needs to be fixed. An example of this is the Pure Food And Drug Act [visitthecapitol.gov] [passed by a Republican congress and signed by Theodore Roosevelt].

      • by guruevi ( 827432 )

        I don't see the need for the predecessor to the FDA needed to exist at all.

        There was sufficient public outcry from proper journalists that were doing their job, people were making choices based on the available information. The Pure Food and Drug Act encouraged rent seeking from chemical manufacturers, food producers were now required to add tons of preservatives to not come into conflict with some law (which we now know have their own problems) and allowed lower quality products to be sold at greater dista

  • by denny_deluxe ( 1693548 ) on Monday September 18, 2023 @11:55AM (#63857870)
    Negligence when building an action figure is a lot less lethal than, say, negligence on an operating table. I mean if you want just any hobo to do your brain surgery, fine, but I'll pass.
  • by rgmoore ( 133276 ) <glandauer@charter.net> on Monday September 18, 2023 @11:57AM (#63857876) Homepage

    A must-watch video is this one with Paul Janssen, one of the giants of pharma, in which he states that the vast majority of drug development budgets are wasted on tests imposed by regulators which "has little to do with actual research or actual development."

    No, they have to do with important issues like safety and efficacy. Maybe drug companies think safety and efficacy testing is a waste, but as a consumer I think it's important the stuff I buy functions as promised and doesn't kill me.

    More generally, it's stupid to take the word of someone from a highly regulated industry when they're talking about the necessity of that regulation. Of course drug companies don't like being regulated, and they're going to complain about how pointless that regulation is. That doesn't mean you should trust them. Naturally, they're going to blame excessive regulation for why drugs are so expensive and not excessive profits and high executive pay.

    • by CAIMLAS ( 41445 )

      Are you kidding? The drug companies -love- being regulated.

      It's those regulations which allow them, the holders of large purses, to remain relevant and profitable. Nobody else is allowed to compete, and they can arbitrarily raise the price of their goods due to the fact that there's no competition/they run a regulated monopoly.

      It's the only thing to prevent people from starting competitive practices - something which would quickly happen if they didn't have regulatory organizations which would trounce them

    • by jbeaupre ( 752124 ) on Monday September 18, 2023 @03:07PM (#63858518)

      Coincidentally, I'm taking a break from drafting compliance plans for a medical device and decided to peruse Slashdot.

      Having worked at several medical companies, I can say that the bigger the company, the less they think safety and efficacy testing is a waste of time. Pharmaceutical companies are just fine with the testing. They don't actually complain because gives them cover for charging a lot and creates immense barriers to entry.

      I worked for a while at a Chinese device manufacturer to implement regulatory compliance for US and EU. Some managers fought it as a waste of time. They were let go. Eventually we grew to the largest in our market segment despite being more expensive. Our stuff was good and surgeons trusted it. Good regulations help everyone.

      But the project I am working on at the moment is a great example of being over regulated. It measures the time for a patient to press a button. That's it. But it's lumped into the same category as electric bone saws. Everything must be documented, tested, validated, purchased, tracked, etc to the same degree. That's down to the individual screws, resistors, etc. The FDA requirements have some flexibility. If something is not applicable, they will listen. The EU MDR is ridiculous. I can reduce 3/4 of my compliance work out by ditching the EU as a market. One of dozens of examples: Why is cytotoxicity testing required on a button? The panel? Because ISO 10993 doesn't differentiate between something you strap to a patient's face for 24 hours and a button they press with a finger. Same with too many standards.

      Yeah, I'm complaining, so you won't trust me. But the expense is real and is getting passed on.

    • efficacy doesnt need to be enforced by government

      the trials will get done independently or else good doctors wont recommend

      If you want evidence, the United States Government only required safety prior to the thalidomide disaster that rocked Europe. We didnt have a problem because we didnt allow thalidomide use before the disaster. We do now, because now the government takes into account efficacy. Its Still Not Safe.
  • by chirino ( 1862184 ) on Monday September 18, 2023 @11:57AM (#63857878)
    When corporations achieve unprecedented levels of profitability, the pertinent inquiry should not revolve around restraining corporate greed. Rather, the more salient question to pose is: 'What factors deter potential market entrants from capitalizing on these profit opportunities?' The presence of limited competition within the realm of prosperous enterprises contributes, in part, to the prevailing inflationary pressures. Our current markets have consolidated way too much and we are not getting enough new entrants.. so yeah, regulations are likely part of the problem.
  • by OldMugwump ( 4760237 ) on Monday September 18, 2023 @11:58AM (#63857882) Homepage

    This has been known for 100 years, going back at least to the writing of socialist historian Gabriel Koko, https://en.wikipedia.org/wiki/... [wikipedia.org] .

    Big business uses the left as puppets to impose regulation on itself, to make life easy and keep out competitors. Regulators end up as defenders of the status quo and of the industry they regulate.

    The regulation is real, and involves lots of expensive red tape that consumers pay for. But big established firms can cope with the complexity - little upstart competitors can't.

    It's all a scam, one that uses "consumer advocates" and people on the left as dupes.

    • Let's face it: producing a consumer product is not easy.

      Well, actually, I should say, producing a safe consumer product is not easy.

      Well, actually, I should say, producing a safe and high-quality consumer product is not easy.

      I am not willing to sacrifice product safety in the pursuit of more "competition."
      • by CAIMLAS ( 41445 )

        But many people are. Why can't they have that choice?

        Do you really trust the government's "regulations" over third party groups - many of which have a better track record of analysis and judgement than the FDA, when it comes to healthcare?

    • by ljw1004 ( 764174 )

      Big business uses the left as puppets to impose regulation on itself, to make life easy and keep out competitors.

      Is it really just the left? I think of business lobbying that forbids local cities from setting up broadband, for instance. Although you cited Gabriel Koko, you conveniently omitted his observation that businesses leverage right as well as left wing governments, e.g. https://reason.com/2014/05/20/... [reason.com]

      "... disinfectant that clears away both liberal myths about benevolent reformers and conservative myths about independent, market-loving businessmen"

      My understanding is that business aim for monopolies, and monopolies are what drive up prices, and they'll go for them in whatever way they can -- through lobbying for governments to enshrine monopolies, for go

  • 'In Most Industries, Regulation Tends To reduce risk '
    FTFY - regulations don't just spring out of nowhere. That said, regulations should be regularly reviewed or have sunset dates to reduce the risk of accumulation of "regulation technical debt."
  • by Midnight_Falcon ( 2432802 ) on Monday September 18, 2023 @11:59AM (#63857886)
    Elad makes his argument hinging on regulated industries that are regulated because issues in them can cause catastrophic issues and death , his goto examples are nuclear and pharmaceutical. Of course, we don't a fast and loose nuclear power startup and cause a Fukushima-esque incident, or a pharmaceutical company to release drugs that cause people adverse effects and reduce trust in the federal system.

    It appears he hasn't taken a class in American history, specifically about the Gilded Age and Progressive Era. In the Gilded age, unregulated pharmaceuticals wreaked havoc on society -- it wasn't just alcohol, but opium, morphine, cocaine etc available at any Woolworth's, pharmacy, or company-town store in America ("patent medicines.") Much of it was impure, and many patent medicines didn't even reveal their ingredients...which were often, nasty. This brought the temperance movement, a reaction that caused alcohol to become illegal for ten years. Alcohol during this time of unregulated, bootleg production was unpalatable at best and poisonous at worst, often containing methyl alcohol or other nasty ingredients.

    Lack of regulation also gave rise to monopolies such as Standard Oil. So, in short, America already learned it lessons about being fast and loose about these regulations...and the ones he's suggesting are too regulated would surely result in lots of death if de-regulated.

    • There are issues of magnitude that are often ignored in these arguments. "Regulation" and "De-regulation" are somewhat meaningless terms when used alone.

      For instance, onion production, for some reason, is regulated. This can cause price swings of up to 50%. The average consumer might not care if the bag of onions they buy every two weeks costs $4 instead of $3, but a fast food chain that buys hundreds of tons of onions a year cares quite a bit. De-regulating onion production would smooth out the price fluct

  • The health care market, AFAICT, isn't even held to market norms like a normal, transparent schedule of labor and materials pricing. Health care providers have no fiduciary responsibility to their vulnerable patients to exercise a reasonable care in providing "best value" to their patients absent informed consent from people with Power of Attorney.

    We could easily solve a lot of these problems by having special civil court rules that require a jury of professional near-peers for medical malpractice suits and

  • Healthcare everywhere in the western world except the USA is just as regulated, but drastically cheaper. Why? Because it is also single payer.

    The same is also true of energy and the other examples given.

    • by jd ( 1658 )

      Exactly. The bulk of the costs has nothing to do with regulation and everything to do with inefficiencies deliberately built into the system through political dogma.

  • by jd ( 1658 ) <<moc.oohay> <ta> <kapimi>> on Monday September 18, 2023 @12:24PM (#63857956) Homepage Journal

    ...does really well, until it implodes and kills everyone. Regulation is necessary in any safety-critical system, not to appease bureaucrats as the blogger claims, but to ensure that the necessary quality controls are in place.

    But let's consider how much cost is actually added by regulation. The NHS has far more regulation than the US healthcare system, yet costs half as much. The UK also spends less on education, yet scores higher on league tables.

    This evokes one of Mrs Thatcher's more astute comments (yes, she actually got a few things right): it's not how much you spend that matters, it's spending it on the right things that matters.

    • This evokes one of Mrs Thatcher's more astute comments (yes, she actually got a few things right): it's not how much you spend that matters, it's spending it on the right things that matters.

      I was going to post a similar thing: it's not the quantity of regulations that matter - it's the nature of the regulations.

  • There's a name (Score:4, Insightful)

    by fazig ( 2909523 ) on Monday September 18, 2023 @12:25PM (#63857960)
    for those:

    less regulated industries (clothing, software, toys) drop costs dramatically over time

    Industries that get as close to slavery as you can get in modern times.
    You get clothes that are produced by prisoners or people in sweatshops. Because there's plenty of people to exploit.
    You get software from companies that crunch young developers into burnouts. Fortunately for them there's plenty of junior developers to exploit.
    Same story with toys which are produced by prisoners or under terrible conditions for workers in countries where a human's life isn't worth a lot.

    I wouldn't use these race to the bottom industries as a good example of healthy competition that can be accomplished by lack of regulation.
    Now even disregarding all the human rights things for a moment, I don't see how such an approach would work for health care or education for example. Especially in health care where mistakes can have grave consequences.

  • The absolute last thing the big companies want is a bunch of us Jackasses doing our own LLMs. They will get the government to declare this dangerous, and without a doubt, the government will pile on the regulations which pretty much entirely restrict us to using APIs of major AI companies, and that will be it.

    The only saving grace will be how hard it will be to define an AI. This will open up new avenues where people create things the rest of us will call an AI but the regulators won't.
  • That's just a nice new name for corruption, even if the US has laws saying some forms of corruption is A-OK.

  • Entering the market where there is regulation isn't as hard as the author suggests, nor is it hard just because of regulation.

    Try entering the search engine market. You'd have to spend a LOT of money, even though it's not a highly regulated sector. Why? Because it's always hard to enter a market where there is a single dominant player. If the government starts to regulate search, as they are starting to attempt to do, it will make it easier, not harder, for new players to enter the market.

  • The bigger, more politically connected companies are the ones who are writing the regulations and they tailor it such that small companies can't afford the manpower, legal team, and lobbyists to comply with the regulations and still be able to compete. In addition, criteria such as past-experience also shuts out newcomers. This is historically true. You need only look at the CAB bill which was written by Juan Tripp and Pan Am to ensure that they were the only airline that could fly internationally. It took

  • I was going to skip this one until I read the other responses. It it is *axiomatic* that the cost rises with regulation, why does any grown-up adult ever imagine otherwise. I am startled (although not surprised) that people need this explained to them.

    • Cost rises with regulation for sure. Also water is wet. The sign of a *good* regulatory system is that the rise in quality exceeds the rise in price. The inverse is true for a poor regulatory system. Taking about regulation as good or bad is simplistic to the point of not distinguishing between effective/ineffective or good/bad regulatory systems. As if they were all interchangeable.
  • Also....WHAAAAAAAAAAAA!!!

  • It's unfortunate that many of the comments on this site just dismiss Elad outright because he's an entrepreneur and VC who's made money in unregulated markets. Let's take a look at his arguments on their merits and then see where that goes.

    On a few of his points, he's right. Regulation for the nuclear industry for example has stifled perhaps the single biggest opportunity we had to get off of coal or natural gas. In healthcare, his examples are not wrong. Regulation, and specifically not the FDA but t

  • It's worth pointing out that Elad's "Less to More Regulation" label could be accurately changed to "Less to More US Production Expenses" without changing anything else on the graph. There are *at least* two explanations for the trend that's been observed. This article strikes me as searching for data to justify an established view-point, rather than arriving at a conclusion based on the available data.
  • The thing that inflates drug costs the most is not clinical trials but endless patents. The pharma industry keeps using patent law loopholes to keep their drug patented even decades after the original patents formally expired. There used to be a generic drug industry which produced cheap patent-free drugs and some of those companies even got big enough to start their own research. But it was mostly bought up by big pharma or driven out of business by endless patents.

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