S.M. Oliva sums it up quite brilliantly:
He’s right to attack the “selected but unelected few” as the real problem here. While regulators of all stripes claim the protection and “legitimacy” of the democratic system, in truth these folks are no more agents of democracy than a third-world dictator. Most people will cover their ears and repeat to themselves, “They’re just enforcing the law,” ignoring the reality that there is no law here, just vague mandates that are constantly subject to the changing whims of whatever bureaucrat happens to declare himself in charge that day.
When people accept schemes like zoning codes, what they’re saying is, “We value wealth-destroying bureaucrats over wealth-producing businesses.” It’s that simple. Because there’s no such thing as a regulatory scheme with 100% compliance. Even if nobody is breaking a given set of rules, the bureaucrats are compelled by the nature of their positions to manufacture violations — not only to justify keeping their present positions and salaries, but to ensure the potential for future growth in demand for regulations.
The sad part is how easily swayed some are by hyperbolic hypotheticals. Sure, it’s possible that food processing company might put a heavy dose of cyanide in very can of peaches it ships. But this producer is not going to stay in business for very long because the demand for lethal peaches is near zero. (And since we’re here, wouldn’t “Lethal Peaches” be a great band name?) The market is self-regulating in this sense.
Now, the market is neither perfectly efficient nor perfectly rational. But saying that the market is not perfectly efficient does not prove that regulatory agencies are. In fact, it does not even prove that regulatory agencies are more efficient, or better in any way. Thus, the case for regulating markets as it is thus presented is invalid because the market is demonstrably superior to the state at regulating the market.