I think i get it Andy
so can we say that the governments roll is simply providing a level playing field here?
too much regulation, nothing moves
too little and only big dogs win ?
~S~
I'd be hard pressed to show an example of 'too little regulation'.
I would even go so far as to say the only time we do not have a level playing field, is when government gets involved.
When you say the big dogs win.... regulations are what cause that.
Look, what most people don't understand is that all regulations impose a cost. Now the cost might be small, or it might be a very large cost. But all regulations impose a cost.
Now let's say that I'm a big dog. I'm a Mega-Corp. I have $10 Billion a year in profits.
Now you on the other hand, are a small 50 person company, and you have $1 Million in revenue.
And for the sake of discussion assume we're both in the same market.
Well you vote for a bunch of politicians that pass a bunch of regulations on our market.
Now these regulations drop a cost of $400,000 on companies. And these are not one time fees. These are costs for new processes or production steps, or other added features or costs that are on-going.
Now what does that do to me? I have billions. I can easily afford to make this happen.
Now what does that do to you? You barely have a million in revenue. That much additional cost will likely drive you out of business.
In fact, I might even send you a cash offer to buy you out, which might take given how drastically low your profits would go implementing these regulations.
And that's not the only problem.
The other side is that regulations prevent you from diversifying your product. This is sometimes a hard conception to understand, but I'm the big dog. I'm the mega-corp right? I have store outlets everywhere, and I have the big warranty, the massive support network.
You are the new upstart. So how do you get customers to take the risk of buying your product instead of mine? Well you do that by making your product different, or making your product cheaper.
The problem is regulations prevent you from making those changes. We put in this regulation that either mandate that the quality has to be at the same level, which means price has to be the same too. Or we put in place regulations that everyone has to have the same features, which means you can't make your product different enough to warrant people buying it.
If your product is almost exactly identical to mine, why would anyone buy from the smaller company?
Regulations inherently benefit the mega-corporations. Always have. There was never a time that it didn't.