How Regulation Can Kill Consumer Choice

One of my favorite shows on TV right now is Bob’s Burgers.  In Season 4, a single episode so perfectly captures regulatory concerns it’s almost as if an economist wrote it.

The episode is Season 4, Episode 7, “Bob and Deliver.”  In the episode, Bob is hired to be the home ec teacher at his kids’ school.  The kids in the class begin learning to cook and quickly become excellent chefs, to the point where the kids at school would rather spend their money at the “home ec-staurant” than at the cafeteria.  Of course, this infuriates the lunch ladies (who are employed not by the school but by a firm hired by the school to do the catering).  After several attempts to intimidate Bob to shut his class down, they eventually turn to the school, which promptly fires Bob, shuts down the home ec-staurant and forces the kids to eat the cafeteria food.  Bob and the kids stage a brief (and ultimately successful) revolt, but not without loss.

This episode, in 30 minutes, does an excellent job capturing the problems with regulation: regulatory capture (that is, a firm that is supposed to be controlled by the regulators eventually using them to suppress competition, like the way the lunch ladies do to Bob), loss of consumer choice (the students couldn’t choose whether to spend their money at the home ec-staurant or the cafeteria), and harm imposed onto the consumer (since the students couldn’t choose, they couldn’t choose the option that gave them the greatest welfare).

When free market economists like myself object to regulation, we have these very concerns in our mind.