The fundamental tendency in business regulation in a mixed economy (Graph 1) is that economic power and political power (explained on pp. 5.2:6-10) become more and more intertwined, as we shall see here. First, the natural complexities of regulation—in some cases tantamount to running whole industries—necessitate that detailed decisions be administered by specialists, popularly known as "bureaucrats," rather than by the legislature. In order to regulate private industries with any probability of success, these bureaucrats must be familiar with the details of those particular businesses. Regulators quickly discover that they cannot simply issue edicts to businesses without learning how and if those requirements can be realized in practice: that is, they must learn how those businesses are run. Typically, as a consequence, many bureaucrats are themselves former practicing businesspersons from the very industries that they regulate. Furthermore, in order to develop familiarity with the needs and procedures of those industries, bureaucrats naturally tend to cultivate personal contacts with leaders of the regulated businesses, attending the same conferences, perhaps exchanging email, communicating through the same publications and websites, and so forth. By practical necessity, therefore, regulators are drawn into a "cozy" relationship with the officials of the industries they regulate. To view these trends on the graph at the bottom of this page, scroll down as needed.      Next page
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