Ever Watched Daddy Day Care? Great movie isn’t it.
Two dads get fired, and soon start a day care to earn some money. It soon grows to the point of threatening the pre-school, Chapman Academy.
But soon the dads have to fight to stay alive as the Chapman Academy goes after them, trying to shut them down.
Using regulations and some dirty tactics, the rival school tries to shut Daddy Day Care down. Luckily, it doesn’t work and Daddy Day Care ends up growing tremendously. Everyone lives happily ever after. The end.
Whatever the moral of the story is, I think there’s another one hidden beneath it all.
An over-regulated market creates unhealthy competition, and corruption. (click to tweet)
Look at Daddy Day Care
There was obviously competition between the Chapman Academy and Daddy Day Care. Chapman Academy was losing students and income to their rival. Instead of making themselves more competitive with lower prices, improved education, or a kid friendly environment, they used the government to attack their competition.
Industry Regulations Aren’t Always for Customers
If you thought safety standards were enacted solely for your safety then you’d be wrong. “Safety standards” and the like are more often than not used to control the competition. Sometimes it can even keep competition out of the industry. That’s when it becomes a monopoly.
The Chapman Academy did just that. They used industry regulations to attack their competitor.
Competition in an Over-Regulated Industry Sucks
Here’s how natural competition works. A company comes into the industry and offers a product at a lower cost for more value than their rivals. The rest of the industry now has to provide value of equal or higher value to compete with the new company.
The only people who lose are the companies who refuse to provide more value. The people who always win are you and me. You’re always going to get great value and prices as long as there’s healthy competition in the market.
In a regulated industry, this isn’t the case. Competition becomes more of a “rule fight” than a way to provide more value. You, the customer, usually ends up being the loser whenever rivalry occurs.
Competition is natural facet of a Free Market. In a heavily regulated market, it turns into a fight between Godzilla and King Kong. No matter which beast wins, the city always ends up destroyed.
Increased Difficulty for Emerging Businesses
The more “building codes,” “safety standards,” and other bulky regulations exist in an industry, the harder is becomes for new blood to come into the market.
The new guy doesn’t have the money to bring everything “up to code.” He just can’t do it, and in the end he either quits or never starts at all.
You want to kill businesses and jobs, pass more regulations and “standards.” (click to tweet)
Government bureaucracy is never as “innocent” or “selfless” as they would lead you to believe. A small government is a better government. A Free Market is the only market.