The Regulation Debate: Why Bother?

The Federal Trade Commission (FTC) must be lacking work these days. Maybe the slowed economy and depressed market have given the FTC too few mergers to squash.

How else do you explain the decision to convene a three-day powwow to engage the never-ending debate over whether states or private companies are hindering e-commerce growth?

They can’t possibly think they’re going to come to any conclusions.

We Said, They Said

The fact is that the debate the FTC is going to sponsor is just that, a debate: an academic, an intellectual and — maybe above all — a philosophical exercise.

And no matter how eloquent the arguments, no matter how compelling the evidence, those who believe in regulation will never be swayed, and those who think government can only harm business will never think otherwise.

No doubt the Republican administration is interested in having this debate while it controls the White House and half of Congress. But the FTC is playing it down the middle, saying it will invite representatives of both sides of the issue to address each of the industries where claims have been made that competition is being strangled.

That’s good. But it’s also pointless.

Lose-Lose Situation

Take the Orbitz case, for example. The two sides can’t agree on whether Orbitz threatens competition. Also, they have vastly different interpretations of the same document. Last month, Orbitz issued a press release saying a Department of Transportation report found that the company is not a threat and actually helps consumers.

Was the report true? Well, sort of. The report was also rife with qualifiers. The big “but” came in the form of the old wait-and-see, with the DOT saying that the Orbitz case bears watching well into the future.

Of course, the forces in favor of regulating Orbitz pounced on the parts of the report that would lend them support, choosing to ignore the parts where the DOT said everything seems acceptable so far.

So if two sides can’t reach agreement on what a report says, how is any consensus possible on bigger questions? Questions like, “Do state regulations really prevent alcohol sales to minors, or were they just enacted at the behest of liquor distributors to protect turf?” or, “Is it essential that real estate sales be handled by someone with a physical presence in a state?”

Into the Muck

There are no black-and-white answers to those questions. The entire debate, from Microsoft all the way back to the railroads, has been fought in the gray area.

And there it is likely to stay. The balance might shift from time to time toward more or less regulation, depending on who has the power and the votes. But it will never change dramatically.

Then again, so what? E-commerce might be bumping up against some barriers, but it hasn’t exactly fallen down in the process. As long as growth continues, the idea that anyone is undercutting e-commerce is a hard sell.

Looking to Government

Looking to government to knock down those barriers is the wrong approach — even if it’s the easiest approach.

Government rarely helps when it gets involved. Besides, regardless of who tries to hold it down, e-commerce is going to be strong enough to break down any barrier in its way. It’s only a matter of time.

What do you think? Let’s talk about it.