Increasing prices and deteriorating product quality, resulting from the causal influences described in the last two pages, create widespread popular dissatisfaction. Consequently, consumers and their advocates clamor for still more regulation. Furthermore, the very existence of regulation creates moral and legal precedents for further regulation, eventually overcoming any popular commitment to principles of freedom and private property (unless those principles are reasserted by a strong philosophical movement). Indeed, the increasing erosion of such principles exemplifies on a large scale the virtually inevitable harmful effects of moral compromise, discussed in Section 3 (pp. 3.10:13-6).

As greater and greater governmental control fails to solve the perceived problems, popular demand arises for outright nationalization of the regulated industries—or, in some cases, seizure of industries at the state-government level. (As an alternative to nationalization, widespread dissent can be repressed by creating a dictatorship, suspending freedom of speech and the press, and imposing a secret police, as in a fascist or national-socialist state.) After an industry has been nationalized, it can be subsidized by tax funds, leading to outward improvements and temporarily quelling the clamor of discontent.