Regulatory capture in all its forms (the government passing laws designed to protect industries from competition or the forces of the free market).
Health care would see massive savings alone, I mean if we eliminated regulatory capture and had true competition combined with single payer I’d assume half a trillion alone in savings at minimum.
But in states like California, regulatory capture on the local level is used to keep housing supply low, which keeps rent and mortgage payments high. Who knows how much money people would save in housing costs if California urban areas had a free market for housing. Probably in the tens to hundreds of billions a year.
All the money spent on communications and IT due to lack of competition (broadband companies refusing to compete in the same city, lawsuits filed against new competitors to keep them out of the market, etc). When Google fiber entered some marketplace and offered competition, the other providers were forced to offer higher services and/or lower prices to compete.
I’m sure there are lots of other areas where regulatory capture has driven up prices.
I would assume at least 5-10% of our economy is money spend on high prices due to regulatory capture (much of it due to health care). Has it been studied?
Some regulations you need obviously, but some are just designed to hinder the market from working. Distinguishing them isn’t always easy.
A lot of those industries would collapse while housing costs would regionally skyrocket, so first there’d be a major depression to recover from but after that, hey… cha-ching!
ETA: It occurs to me that that’s unfair - the chaos would happen if this kind of wholesale de-subsidizing took place abruptly, which is the kind of thing I’d expect Trump to do (or rather, to talk about doing while not actually doing it), but done very gradually over a decade or more, I can see some benefits.
Quoted for truth. There are obviously forces that argue, on a piece by piece basis, there is not regulatory capture. Others might argue every regulation produces at least some capture. Trying to sort out that argument, no matter what standard you use, is going to be subject to debate.
The OP is looking at only half the equation. There might indeed be savings if regulatory capture was eliminated, but what about the costs? All these pie in the sky numbers are meaningless without them.
I also fail to understand what is meant by a single payer system with true competition. Isn’t that a contradiction in terms?
By definition, regulatory capture is waste. It’s regulatory capture if it’s inherently corrupt, and the industry is manipulating its own regulation for its own benefit in a way that costs society unnecessarily. Eliminating regulatory capture means just eliminating that phenomenon - not ALL regulation.
Implying that “Building restrictions,” for instance, are regulatory capture, as puddleglum does, just isn’t technically correct. That isn’t what economists use that term to mean. One can argue about the wisdom of a building restriction but that’s not regulatory capture unless one can demonstrate that it is the result of the construction industry controlling the agency that determines building restrictions.
I mean a single payer system where the government negotiates prices, but there is also international competition. If a surgery is cheaper overseas than it is domestically the single payer system will cover your treatment overseas if you want it while offering you financial incentives to take the cheaper care (if the domestic single payer system charges $20,000 for a surgery but a surgeon in Thailand will do the same surgery for $5,000, then you incentivize people to travel overseas).
Regulation is necessary. When Haiti had an earthquake in 2010 it was 7.0 and destroyed the Island.
Then not long after Chile had an 8.8 earthquake but it did far more damage despite being much more powerful because Chile has building regulations that make buildings earthquake resistant.
But finding the regulations that aren’t necessary for safety or sustainability, but are just created to discourage competition in the marketplace.
For example, with WesleyClark’s proposed healthcare system, there might be a disagreement as to the sustainability or necessity of strong and domestic health infrastructure if the government encourages people to seek out cheaper care overseas. If doctors and hospitals successfully lobby the government to remove those incentives, does that count as regulatory capture?
Or let’s say we are talking about steel. Pretend the steel lobby convinces the government to enact tariffs on steel imports on the basis that the domestic steel industry can’t compete with foreign competition, and a strong domestic steel industry is essential for national security purposes. Are those tariffs considered a form of regulatory capture?
Or, you know, what about Huawei and 5G? Is that regulatory capture on behalf of domestic carriers, or a legitimate national security policy? It’s a debate unto itself.
If you can’t resolve all of those debates, and there is one for every single regulation, you can’t make a meaningful estimate about regulatory capture.