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this post was submitted on 21 Sep 2023
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Regulations are made to make sure that businesses comply with the minimum safety and health rules, as well as not actively harming the consumer. So, no, no area benefits from deregulation. Giant companies love deregulation so they can monopolize and/or fix prices. Getting to your barber example: if I'm trying to find a barber, I will surely only look for licensed barbers, as I surely do not want a busted hair job, or to incur in any hazard. Simple as that.
In Brazil, during 1990 - 2000, telecommunications were a highly regulated market. Due to difficulties to enter the market, there was not that many companies around, and outside big cities, phones are mostly inexistent or too expensive for the average customer.
I remember that in my city (100k people) there was only one option, and in my mother's city (5k people) there was no option.
After ~2000, the government did a big deregulation, making easier to other companies to enter in the market and do investments. A few years later, we got coverage across the entire country. For example, in 2005 my city had 5 options and my mom's city had its first option. At this time my family finally could afford paying for a phone plan.
So yeah, excess regulation can harm markets, and deregulation can be good. Finding balance is key here.
Regulation is hardly on the top 20 Brazil problems list. Be serious.
I mean, you said that deregulation has no benefits, I just gave you an example that disagrees with your idea. It does not matter other Brazilian problems in this context, I could take any example of any place to prove my point.
It does matter because you cannot isolate the effects of regulations from the corruption, violence, etc... All of which are huge issues in Brazil.
So can you explain for this specific case how other factors influenced in a way that the deregulation was still bad for the end user?
I didn't have to search much to find an article talking about the corruption in the Brazilian telecommunications free market: https://teletime.com.br/10/12/2019/o-passado-mal-explicado-das-telecomunicacoes-no-brasil/ Sure, you can argue that many of these companies simply went bankrupt, but the weight of those bankruptcies falls on the same shoulders every time: private profit, public loss. Sure, there were a lot of telecoms opening at that time due to the government opening up the market, but at what cost?
Sorry, I'm not following you. We're discussing if deregulation is always bad or not, and my point is that it can be bad in excess.
The article points to some corruption that happened at the time, which is correct, but it does not discuss anything about the benefits (or lack of it) for the end user after the deregulation.
If we could prove that if we kept excess regulation in the market as it was before, people still could have access to telecommunication as we have today, my point should be wrong. But its not the article discussion or what you're saying now.
Notice that I'm not defending 100% deregulation, even in the Brazilian example the market is still regulated today, just way less than it was 20 years ago. If we have no data caps for residential internet around here, its because of a regulation, not companies good faith for example.
Out of curiosity I asked chatgpt to list examples similar to the Brazilian one and it listed a few:
United Kingdom - Energy Deregulation Japan - Rail Deregulation New Zealand - Telecommunications Deregulation Australia - Banking Deregulation Sweden - Postal Service Deregulation
Truth is, its really hard to prove that something "is always" good or bad, as it will need to go over all cases and prove the point one by one. Normally economic discussions are applied to a society or sector, so we could say "in the US deregulation is often bad", which is much more fair and easy to prove.
It's true, there are factors that will make things sort of work, or make them go downhill very fast. In Portugal, there was a lot of deregulation in the past few 20 years, which brought higher prices, monopolies and fixed prices. That's my main reason for not believing in deregulation, but I understand that there may be exceptions to this. I just think that they're precisely that: exceptions to the rule.
Also, I love that I'm having a deep conversation in the memes community!