There's No Such Thing as a Free Lunch

The ability of special interests to get legislation enacted in their favor or to take over control of governmental bodies set up to regulate them, which is exemplified in this chapter as well as in Chapters 10 and 12, has led many social critics on both the left and the right to conclude that there is a "ruling class" that runs the government and through the government the society. On this view, the ruling class is able to use its control of government to line its own pockets at the expense of the rest of the country.

Fortunately for the chances of preserving and extending freedom, the conclusion is false. True enough, we have a mass of special-interest legislation and of regulating agencies dominated by the industries that they are supposed to regulate. True enough, the apparent beneficiaries of each such piece of legislation or of such regulating bodies are generally in the upper income groups, or at least in groups above the average. However-- and here is the fallacy in the "ruling class" view--the special interests that are served are fragmented and each gets its benefits largely at the expense of other special interests. It is likely that the special-interest groups as a whole and possibly each one separately would benefit if the special- interest legislation as a whole were abolished.

Consider a simple illustration. Air fares would be roughly 60 percent of their present level if they were not controlled as they now are by the C.A.B. We know this because two states ( Texas and California) are large enough to support substantial intrastate carriers that are free from C.A.B. control because they do not engage in interstate travel. (They are controlled by state bodies, but that has apparently not been very restrictive.) Their fares are about 60 percent of the controlled fares on comparable

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