I was in the hearing aid business a few decades ago. As a minority shareholder and chief operations officer, it was my job to build out a network of retail stores, manage our manufacturing operations, and manage the relationship with a foreign manufacturer that provided us products not previously available on the American market. We also had a plan to sell less expensive hearing devices in pharmacies.
Opening our first retail store was an exciting endeavor. We had a good location in a plaza with a solid anchor on a very busy intersection. We prepared our grand opening for months and were understandably excited for our first day of business. We ran ads in all the local newspapers and looked forward to our first patient walking through the door.
The advertisements did generate phone calls, but the first one was not from a potential customer. It was from the State Department of Health, informing us there had been a complaint about one of our newspaper ads. We were required to submit a response to the complaint after which the department would make a determination of its validity and any further action against or required of us.
Obviously, the complaint didn’t come from a customer; we had no customers yet. The complaint came from a local competitor who literally waited for our first hour in business to call the state. This is the way the world works.
The complaint was found to be without merit – our ad was not misleading or out of compliance with any regulations – but it certainly took the edge off an otherwise happy day. We lived and learned.
A few years later, after confirming there were regulatory barriers to selling “assistive listening devices” (not quite hearing aids, but helpful for mild hearing loss at about 1/10th the price), we tried to lobby the state legislature ourselves. We successfully got our revision to the applicable statutes into a bill about other matters that was sure to pass and were told by the lobbyists we hired that it appeared we would be successful.
Then, on the very last day of the legislative session, the language was taken out after an all-out assault by a much better-funded set of lobbyists claiming our devices would be dangerous if not fitted by an audiologist.
Obviously, our device that peaked at 30 decibels (the average iPod at the time peaked at over one hundred decibels) posed no health risk to those who used it. But it did pose a revenue risk to those who hired the lobbyists – the audiologists. They also argued that hearing loss in some cases indicated other health issues that may not be discovered if the patient didn’t have an exam by a licensed professional before attempting to treat their hearing loss.
In 2022, the FDA approved the sale of full-blown hearing aids over-the-counter (OTC). Apparently, those other health conditions are no longer a concern. The big corporations have finally adapted their business models to include lower cost products and thus they can be allowed without small upstarts like our little firm disrupting their dominance. So, for almost twenty years, consumers were deprived of a significantly lower cost option for hearing loss for no valid reason whatsoever.
This is the way the world works.
One might ask, “How can you say there is no such thing as regulatory capture after having those experiences yourself?”
Simple. The term ‘regulatory capture’ implies there were once regulatory agencies that operated in an adversarial relationship with large corporations for the so-called “public good” that were later ‘captured’ by those corporations and made to serve the corporations’ interests. But that never happened.
‘Regulation’ itself is and has been from the very beginning a practice created by large corporations for the sole purpose of crippling or eliminating competitors.
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Tom Mullen is the author of It’s the Fed, Stupidand Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?