As regular readers of this blog know, I love to use cultural references to demonstrate economic points. This is another such post.
Kojak (the original, not the remake) has an excellent example of regulatory capture (the concept where a regulated entity “captures” the regulator to help advance their own ends). In Season 2, Episode 14 “The Betrayal,” one of Lt. Kojak’s detectives, Calucci, cultivates a stoolie to provide him information. Calucci uses this info to make arrests and close cases, turning him into a bit of a golden boy at the police station. However, Calucci is being played. His stoolie is using him to take out the competition, allowing the stoolie to advance in the seedy underbelly of 1970’s New York. Ultimately, Kojak uncovers this and puts a stop to it, but not before some good people are harmed.
While this is obviously a dramatized example, this kind of behavior happens frequently within regulatory bodies. A recent example involves mayo. Back in 2015, Hampton Foods received a letter from the FDA demanding Hampton Foods stop calling their egg-less product mayonnaise since the FDA defined mayonnaise as having eggs. This is the same definition competitor Unilever had sued them for “false advertising” and the American Egg Board has put pressure on them and stores to stop selling their products. The FDA’s case was eventually dropped as well, but here we see supposedly regulated entities (Unilever and the AEB) using the regulatory agency to squash competition and advance their own interests.