Sam Peltzman is professor emeritus at the University of Chicago.
Sam is was a graduate student to Milton Friedman and a contemporary to George Stigler, the famous economist who coined the term "regulatory capture".
Regulatory capture is an important concept. AI and crypto is under fire by regulators.
The legendary venture capitalist Bill Gurley gave a talk at the All-In Summit 2023 that went viral. He quoted Stigler's adage that "as a rule regulation is acquired by the industry and is designed and operated primarily for its benefit."
The problem is that it's not true.
Stigler asked the right question, but didn't give the correct answer.
Sam Peltzman has thought and written extensively about this question for 50+ years since Stigler's famous article. The truth is simpler, but more sinister.
In fact, we learn in this episode that it's not industry that seeks to be regulated. Even the pharma industry did not proactively lobby for more regulations - they resisted the landmark Kefeuver-Harris amendments (1963) that shaped the modern FDA.
It's regulators who seek to regulate for their benefit.
Bill Gurley might be on the right track commenting on Elizabeth Warren's behaviour towards tech: "You attack 'em they have to come to you.”
This is a very nuanced episode on what might be the most important but least understood problem for greater progress in technology.
Sam Peltzman's legacy helps us to understand what's coming at us.
Yet his message is deeply optimistic: technology is still unstoppable. It can only be temporarily slowed down, not eliminated.
Ep. 66: The World’s Greatest Living Regulatory Economist - Sam Peltzman’s Intellectual Legacy, Bill Gurley’s Tirade Against Washington and Regulatory Capture Revisited