Examples of libertarian market successes

November 27, 2017 7:43 AM

In the run up to the FCC decision on Net Neutrality, I've been seeing libertarians happy that this regulation might be rescinded. It has left me curious: what unregulated markets do libertarians point to as working well for individual "consumers" (in quotes bc there are many different types of markets) because of free market corrections. (I'm aware of the philosophical arguments for lack of regulation per se, I'm asking specifically about examples where no/low regulation leads to a better outcome for citizens instead of just for capital.)
posted by OmieWise to Law & Government (8 answers total)

The deregulation of various industries - airlines, trucking, railroads, natural gas, and telecommunications - which began in the United States in the 1970s and 1980s, substantially reduced prices paid by consumers, typically by about half. See Table 1 in Extending Deregulation.
posted by Mr.Know-it-some at 7:57 AM on November 27, 2017 [1 favorite]

The deregulation of various industries - airlines, trucking, railroads, natural gas, and telecommunications - which began in the United States in the 1970s and 1980s, substantially reduced prices paid by consumers, typically by about half.

That still speaks to capital, though. There's more to things "working well" for consumers than simply price. Ask anyone who flew airlines, for instance, before and after deregulation if the product quality, at the very least, stayed the same post deregulation.
posted by Thorzdad at 8:47 AM on November 27, 2017 [5 favorites]

Yes, there's more to consumer utility than just price, but lower prices paid by consumers is clearly a benefit to consumers, not owners or investors. (That's what I interpreted "for citizens instead of just for capital" to mean, although both consumers and investors are generally also citizens.)
posted by Mr.Know-it-some at 8:54 AM on November 27, 2017 [2 favorites]

The "deregulated" industries are still mostly highly regulated. For example, think of all the FAA requirements for commercial aviation. Mostly. deregulation meant the freeing up of pricing controlled by a cartel or some administrative body. Deregulation did not go well everywhere. In California, deregulation of electric power led to the bankruptcy of many power companies and the Enron fiasco.

An example of a more or less free market that could be much more highly regulated is OTC vitamins, herbs and potions. Some of what is out there is total fraud.

An interesting market to look at is payday lenders. The forces of regulation want to stamp them out because their costs are high when evaluated in a conventional, interest-rate-over-time way, but libertarians say they fill a niche and can be helpful for people with little access to conventional credit.
posted by SemiSalt at 10:07 AM on November 27, 2017

Low regulation works best in intensively competitive markets where buyers have good access to information, suppliers have little power, there are many substitute goods, and new companies can easily enter the market.

For example, there is relatively little regulation around the sale of clothing, there is also little perceived need for such regulation, and the intense competition in the industry has made clothing dramatically more affordable than it was for our forebears.
posted by grudgebgon at 12:33 PM on November 27, 2017 [4 favorites]

The industries that have been deregulated are those that, by definition, somebody thought in the past were good candidates for regulation. Don't just look at what's changed - look at the kinds of things that have never been regulated. Most industries are not very heavily regulated and most industries "work well" for individual consumers.

For example: computers are not very heavily regulated, and computer quality & performance have skyrocketed over the last decades while prices have collapsed.

Book publishing is not regulated. Basic copyright is protected by the courts; otherwise it's a free for all and publishers can put out crap or lies or awesome things and fine literature, and consumers pay relatively low prices for a huge variety in print, plus new forms like eBooks and audiobooks.

Furniture isn't heavily regulated (outside of some flammability limits and the like), and lo and behold, Ikea can come along and find new ways to keep prices very low and force other companies to compete.

I'm not saying these are ideal examples - there's some regulation basically everywhere in the US, and I don't think there are any industries that are actually working really great for society as a whole. But by and large, most industries are not airlines or rail or internet infrastructure, and most industries produce higher and higher quality at lower and lower prices over time, which is interpreted broadly as "good for consumers." I may question whether they're achieving those low prices 'fairly' - ie, a lot of manufacturing is cheap because it exploits labor or pumps a ton of pollution into the air - but most industries are lightly regulated, and most industries "work" quite well by the metrics that the libertarian argument comes from.
posted by Tomorrowful at 1:18 PM on November 27, 2017 [4 favorites]

The deregulation of various industries - airlines, trucking, railroads, natural gas, and telecommunications - which began in the United States in the 1970s and 1980s, substantially reduced prices paid by consumers, typically by about half.

Brookings is a conservative think tank and correlation does not imply causation.
posted by cnc at 10:52 PM on November 27, 2017

Brookings is a conservative think tank

Depends on what you mean by conservative. The Wikipedia section on its political stance cites some people calling it liberal, many calling it centrist, and some calling it conservative. "A 2005 academic study by UCLA concluded it was centrist in that it was referenced as an authority almost equally by both conservative and liberal politicians in congressional records from 1993 to 2002."
posted by Mr.Know-it-some at 6:33 AM on November 28, 2017