Who’s to blame for this kind of regulatory capture: crooked politicians or crooked businesspeople? Obviously, both. But the problem is also systemic. As long as governments have the power to regulate our lives, powerful people will twist those regulations to suit their interests, not ours. Big business loves regulation, not only because they can control it to some extent, but also because it helps them maintain their entrenched market positions. They can afford the teams of lawyers required to deal with mountains of rules. Small upstarts who might otherwise challenge their market dominance are effectively hobbled by the burden of regulatory compliance.
It doesn’t have to be this way. We could try less regulation and more reliance on free market competition and tort law. Companies, big or small, that offer better, cheaper products that people want to buy would win market share. Consumers who are misled about the risks of certain products could sue for damages, and the threat of such legal recourse would keep most producers in line. Would such a system be perfect? Of course not. But would it be better than the current, heavily regulated alternative? Undoubtedly.