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A Majority of Voters Favor Increased Competition Rather than Increased Regulations to Hold Companies Accountable

Nearing the one-year anniversary that President Obama signed the Dodd-Frank Act into law on July 21, 2010, debate over the debut of the controversial Consumer Financial Protection Bureau (CFPB) heats up. Moreover, polling data reveals that the public is not entirely convinced that more regulations will best solve problems in financial markets.

The Dodd-Frank’s CFPB will add additional regulations on the lending practices of banks, mortgage lenders, and credit card companies. As the Wall Street Journal reports, critics argue “that it is a flawed agency that has too much authority over financial firms without enough congressional oversight”. Last fall, President Obama bypassed the Senate confirmation process and appointed Harvard law professor, and long time critic of the financial industry, Elizabeth Warren to help set up the new regulatory bureau. Ms. Warren is convinced of and has argued for years for the need for more regulations to protect consumers from the financial industry. However, her advocacy for more regulations could be problematic if additional regulations also reduce competition in the marketplace, as is often inadvertently the case.

Interestingly, a Rasmussen national telephone survey conducted last fall found that a majority of Americans believe that more competition rather than more regulation is the best way to protect borrowers from unfair lending practices.

What will do more to protect borrowers from unfair lending practices: more competition or more government regulation?

More competition 51%

More government regulation 29%

Not Sure 20%

Moreover, another recent survey conducted this month by Rasmussen found that a majority of all voters believe that increased competition rather than increased government regulation is the best way to hold big businesses accountable. Only 34% believe increased regulation provides a better solution.

What is the best way to hold big businesses accountable—increased competition or increased regulation?

More competition 56%

More government regulation 34%

Not Sure 10%

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • ||

    Given that the two issues do not serve the same purpose this has to be the most moronic article ever.

    Both must be present, left alone one company always wins and buys up or bankrupts the competition.

    Then your left with no competition and the every repeating problem.

  • ||

    Not true. Monopolies require government support to exist for more than a very short period. The only monopoly to hold power for any length of time without special government help is the Debeers diamond company which went to great lengths to gain a world monopoly on diamonds BEFORE diamonds were indispensable for weddings and anniversaries. They then went on to create today's diamond market through brilliant marketing that permanently changed our culture's view of the stones.

    But enough about the ONLY exception. The point is that monopolies are NOT the norm, when government keeps it's distance.

  • anon||

    "Both must be present, left alone one company always wins and buys up or bankrupts the competition."

    First off, what's wrong with the company "winning?"

    Second, you assume that no new competitors will ever enter the market, ever. Only government can ensure a monopoly. I think you see the fault in your reasoning now, so I won't embarrass you any more.

  • ||

    Either would be better than what the Republicans left us with - massive consolidation and no regulation implementation. You tell Visa and ?BoA that they are too big and must be broken up into abouy 10 smaller companies - what do you get - the list of other moster consolidations that are "too big to fail". If you want to stop regulating start by tearing down the monopolies that drove the world financial markets into the ground and then got a free hand with no accountability - from us - again thanks to the Republicans

  • ||

    uhm... Bush added more pages of regulations to the federal register than the previous four presidents combined.

  • ||

    Yea but the "Progressive Liberals" "Guy" did not write them so to the liberals those "regulations" do not exist.

    Common Progressive "We need more regulations"......
    Libertarian "Why"....
    Common Progressive "Because those people have to much money and they hurt children and puppies.....You like puppies don't you?"

  • ||

    can you please point me in the direction of the study that shows this?

  • ||

    Both are essential. I know of very few business enterprises who would not like to have a monopolistic domination of their particular endeavor. And their is no legal structure to assure we have a perfect competitive system. All in all this is a useless survey. Let our political/governmental system find a balance for a time. Let businesses lobby for what ever they want from "the people". Inevitably, balance will fade and we will add, delete, or change whatever laws or policies we come up with. We need competition and we need regulation. Sometimes we need more of each or less of each or some combination. Static viewpoints assure this. No conservative, liberal, libertarian, or other idealogically driven group can ever come up with a perpetually ideal system.

  • anon||

    Of course businesses would love to have a monopoly on whatever product they offer. Business likes to make money, which is a good thing. The problem is precisely when government does get involved and starts choosing which companies can be winners and which companies are going to lose via regulation. Regulation stifles innovation and prevents new competitors from entering particular markets from the raised barrier of entry, thus ensuring a larger competitors' dominance on a given product.

    Long story short, more regulation leads to less competition. Take a look at the banking/finance industry in the past 3 years if you'd like just one example.

    And yes, there is a perpetually ideal system. It's called a free market.

  • ||

    "And yes, there is a perpetually ideal system. It's called a free market."

    So if I understand correctly, it's a good thing when business become monopolies, and the only issue that arises from these instances is when the government imposes regulations?

  • ||

    You can make a vague case for consolidation within the financial industry but that was almost purely self-imposed. Regulations didn't cause that as much as deregulation created an environment by which banks had to have immediate firesales and the next bank was happy to buy them up at pennies on the dollar. The conversation of deregulation is easy when talking about the financial market but what happens when we shift to companies like Google that have amassed ungodly mounts of private data the none of us really own. Google knows most people better than their spouse, brother or kids and you have no problem letting google do whatever they want with that data in a purely free market scenario?

  • ||

    Like most or all REASON readers, I vote for regulation by competition. But that idea gets a bum rap when it fails. I contend most, if not all, of those failures are due to lack of competition, not competition's failure. It makes no sense to build parallel roadways, railroads or power lines. But competing truck companies, trains or power producers can deliver efficiently when under the threat of competition. So let us separate the competitive elements of an industry from the non-competitive, with no financial ties whatsoever between the two. Should the non-competitive be privately owned and publicly regulated or publicly owned? there is probably no 100% answer to that, but the non-competitive need regular review, for like telephony, technology will change the rules from time-to-time.

    reply to this

  • ||

    These results actually surprise me. It's not what you would expect given the volume of liberal voices on the internet and in the media demanding more regulation.

    I'm glad to see that Americans in general aren't as dumb as our large scale communications make us look.

  • ||

    Please add my e-mail and name to the next Reason-Rupe Poll!
    With even more individuals seeing some of the soundness of Libertarian principles, it would be great to have our voices heard!

  • ||

    My take is that government has a singular and utterly vital place in our economy, just not the one it currently plays. Government has no place to tell business owners how to run their businesses when competition stimulates the best products and services at the best prices without the costs of the government behemoth stomping on everything. On the other hand, competition becomes a rigged game when businesses are allowed to deceive their customers. Simply put, government's only role in the economy should be enforcing customer requests for transparency from businesses so the customers can choose the best provider based on the truth.

  • ابداع ويب||

  • ||

    Increased competition is not only good for consumers, but as a blue-collar libertarian, I know it's good for the workers as well. When there's great amounts of competition companies know it's in their best interest not only to create outstanding goods and services, but to be good to employees as well. Otherwise they risk losing both customers and workers to their competitors.

  • ||

    I find this survey to be hopelessly biased and completely irrelevant. What exactly is "more competition"? It's such a vague statement that it could mean anything. In fact, more regulation can actually INCREASE competition by making monopolies and mega corporations illegal. If there are rules against mergers, acquisitions, forced takeovers etc., then there is more room for competition. On the flip side of that, if there are less "start up" fees and business loans were easier to obtain, then creating a small business is much easier. "More regulations" is also a biased term, if you ask people if they are in favour of "consumer protections" people are overwhelmingly for them because people recognise that large corporations DO take advantage, if not outright abuse their customers. It's unfortunate that consumer protections are all too often refused because of the scary words "government regulations." Regulations, or consumer protections, can be both good and harmful for businesses. Saying "less regulation" is hopelessly ambiguous.
    No one wants to get E coli. or salmonella, do they? Well, thanks to regulations, or consumer protections, there are stringent guidelines that food producers must meet to sell to the public.
    I do not think that government is the answer to everything, but an un-regulated, or un-policed, or free-from-consumer-protections free market is not the answer either. There has to be a balance. Unfortunately, our government is unbalanced and it is unbalanced in the favour of giant mega corporations; which is a threat to our freedoms and our democracy when our politicians are bought and paid for.
    All this survey proves is that people respond to buzz words and that surveys are really just meaningless. This survey accomplished nothing.

  • ||

    "No one wants to get E coli. or salmonella, do they? Well, thanks to regulations, or consumer protections, there are stringent guidelines that food producers must meet to sell to the public."

    I don't know about you, but I would trust a company much more knowing that it would be eliminated by market forces if it killed me. A government-regulated company that kills me gets a fine and maybe some people fired, but is allowed to go on killing.

  • ||

    That's ridiculous - why aren't companies that kill people "eliminated by market forces" currently? Or, how does regulation somehow protect companies from the negative effect of "market forces"?

  • anon||

    Could you please demonstrate the last time any business "took advantage" of you?

  • ||

    That is the most clear minded response I have seen on this site so far. Libertarian free market idealism strikes me as the chosen philosophy of the selfish something for nothing crowd.

  • Gmason||

    I think in general government regulation always does more harm than good. For example, I live in a farming community and many of my friends talk about how they used to have "berry buses" that would pick up kids as young as 10 and 12 and haul them out to the fields so they pick berries and earn spending money. Those days are gone and it would be illegal now, but it's so much better, right, to have them sitting on the couch all summer playing video games - learning nothing about the value of money and hard work, and have illegal aliens doing the work instead.
    I believe there are enough businesses with integrity, that they could come up with some sort of oversight boards, with many a peek in every now and again from the government. As it is, in my county, they want to keep us from collecting rain water on our own property, and the feds may make it illegal to share zucchini from your garden with your neighbor! This has gotten totally out of hand, and it needs to be brought under control.

  • ابداع ويب||

    I'm glad to see that Americans in general aren't as dumb as our large scale communications make us look.

  • ||

    This site is called reason?

  • sbanicki||

    ....We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just Powers from the consent of the governed,...." Declaration of Independence, July 4, 1776

    During the weekend of celebrating our countries birth we gave pause to remember why this country was created in the first place and judge whether we are currently living by these principles. My conclusion is we can do better.

    If we have a government as stated by Abraham Lincoln in 1863 "-- of the people, by the people, for the people, ........" government must assist in finding a way to create opportunity and jobs for the masses that are unemployed. We have a structural and competitive unemployment problem in this country and collectively we must solve it. The free market cannot solve it alone. Read More: http://goo.gl/eRbpn

  • anon||

    "government must assist in finding a way to create opportunity and jobs for the masses that are unemployed."

    No, you're wrong. The government's sole purpose is to protect your life and property from coercion and fraud. I can't find it stated anywhere that it's a legitimate function of government to find you a job. Grow up and go find one yourself.

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  • ||

    Can't remember the last time i actually claimed a political party, and the "independent" position is basically a copout for those who'd rather sit back with their heads bouncing back-n-forth watching political ping pong. So if the govt's just supposed to protect your life & property from fraud/coercion who's job is to pave the roads and build infrastructure?

  • Mabal Zarhairi, II||

    I agree, let's choose the most corrupt, inept, expensive organization to do the most critical work.
    Democrat forever! Because Republicans suck.
    (insert sarcastic emoticon)
    (_!_)

  • Rick Lyrek||

    As a small business owner, I can certainly see both sides of this issue, but then again, its not really one issue. Some regulation is indeed needed to maintain healthy competition. These are two related, though not mutually exclusive concepts.

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    Ah, ignorance is bliss. The idea that participants in the market will police themselves solely through competition works only if Friedman's controls do. Sadly we have recently witnessed is in reality greed is the more powerful element. It, combined with more competition pressures participants to try and find loopholes, and ignore these controls, to come out on top. Laws and regulations, when not laborious and obtuse, are advisable. Yet what exists today is are too many of them and those those fraction that were effective have now been shredded with loopholes or cannot be properly enforced.

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    Time for an article 5 constitutional convention. Those that wish to live under the horrors of the nanny state can. Those that wish to play free market Darwinism may the best gene pool win.

  • Gmason||

    I believe it was government regulation that CAUSED the housing crisis. Whenever you have government control of anything, their are unintended consequences. They are almost always negative, and yet, the government's answer to fix the mess they made is - more government!

  • ||

    Oh right, as though we should run the country at the behest of The Wall Street Journal. In its present Rupert Murdoch incarnation, the trolls at WSJ would probably endorse the return of slavery if they thought it would please their masters without losing too many subscribers.

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  • ||

    Like most or all REASON readers, I vote for regulation by competition. But that idea gets a bum rap when it fails. I contend most, if not all, of those failures are due to lack of competition, not competition's failure. It makes no sense to build parallel roadways, railroads or power lines. But competing truck companies, trains or power producers can deliver efficiently when under the threat of competition. So let us separate the competitive elements of an industry from the non-competitive, with no financial ties whatsoever between the two. Should the non-competitive be privately owned and publicly regulated or publicly owned? there is probably no 100% answer to that, but the non-competitive need regular review, for like telephony, technology will change the rules from time-to-time.

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    What will do more to protect borrowers from unfair lending practices: more competition or more government regulation?

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