This is another example of state intervention negatively impacting the market. Despite all the rhetoric to the contrary the state favors interventions such as this – creation of cartels whether they be labor cartels or commercial cartels.
Cartels represent power blocks with whom state agencies can deal politically. The state itself is the largest cartel with a monopoly on power. There are of course many government sponsored cartels for labor – doctors, dentists, lawyers, real estate professionals, teachers, public employees just to name a few.
Those in the profession desire to limit competition from new entrants – politicians and bureaucrats are always anxious to accomodate these groups. Of course businesses desire to have cartels as well especially in captial intensive businesses – hence we have electric cartels, gas pipeline cartels, gas distribution cartels, telecommunications cartels, export cartels, banking cartels, insurance cartels, securities cartels, airline cartels, etc.
Make no mistake these cartels continue despite the governments claims of deregulation which is actually re-regulation in response to the onerous and near disastrous impact of the cartels on the market – the cartels are opened to allow new entrants under controlled & regulated environments to allow the semblance of a marketplace and lower the extremely high prices of the cartel. Witness OPEC’s current discussions to increase production levels to avoid strangling the world economy – the cartels do not desire to destroy their market.
Cartels mean more jobs for government regulators, more fees for government, and most importantly more power for the politicians and bureaucrats. Power is the business of government and government power brokers are not eager to voluntarily give up their power. As a business associate of mine was fond of saying – there is nothing more worthless than an ex-politician.