When Elliot Spitzer moved from New York Attorney General to Governor, there was a semi-joke that he was taking a demotion. You see, NY’s AG has an obscene amount of power to punish and make demands on businesses. And for that, you can blame the big banks.
Walter Olson has an enlightening piece today in the New York Post, focusing on the source of much of the AG’s powers: The Martin Act and its updates.
It turns out this “consumer protection” legislation has been pushed by big financial firms trying to crush their smaller competitors:
That in turn pleased many on Wall Street — who gained from the general public impression that if you were dealing securities in a major way out of New York, you’d had to pass closer inspection than some guy from Florida or Utah.
As it has turned out, this gambit appears to have backfired for Big Business, Olson argues.
But the story — “consumer protection” legislation being largely an effort by big incumbent businesses to quash smaller competitors and prevent new entrants — is a common one that most people miss.
Big Business has supported and smaller business has opposed tobacco regulation, food-safety regulation, toy-safety regulation, and tax-preparation rules. Think about occupational licensing laws like ones restricting giving people a ride home, arranging flowers, braiding hair, or selling lemonade. Who benefits from them?
