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A simple Nobel to understand

For most of us, the work Nobel Prize winners do in fields such as science and economics is impenetrable. They write about exotic reactions among various chemicals, models to predict how economies will react to certain stimuli, etc.

But Frenchman Jean Tirole’s Nobel Prize in economics is easy to understand. He won the prestigious award this week for work demonstrating that often, government regulations cost consumers money unnecessarily.

That is simplifying Tirole’s conclusion, of course. It is important to note that he understands some regulations are necessary and a few actually benefit consumers.

But many do not. For example, Tirole investigated regulations on the cable television and Internet industries. He found that consumers would pay less for service if some U.S. regulations on cable and Internet service providers were not on the books.

“Politicians would be stupid not to take his policy advice,” Nobel prize committee member Torsten Persson commented.

Well, yes and no. Politicians – and, more to the point, bureaucrats who enforce government regulations – have their own agendas. Sometimes they do not coincide with consumers’ best interests.

A more practical interpretation of Tirole’s work might be that voters should demand a stop to government regulations intended as social engineering or, even worse, to grow the bureaucracy.

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