Strictly regulating an industry with high demand, like healthcare or vaping, often backfires. Instead of eliminating risk, it pushes consumers and providers into a "parallel" gray market that is less regulated, less coordinated, and ultimately more harmful. The intended consumer protection fails because the regulated system becomes too difficult to operate within, forcing activity outside the "kingdom walls."

The Froyo industry's previous decline wasn't due to a lack of demand, but a surplus of supply. The business model—low-cost self-serve machines and minimal labor needs—was so attractive and easy to replicate that it led to oversaturation. The industry essentially became a victim of its own success.

A paradoxical market reality is that sectors with heavy government involvement, like healthcare and education, experience skyrocketing costs. In contrast, less-regulated, technology-driven sectors see prices consistently fall, suggesting a correlation between intervention and price inflation.

Policies like price caps (e.g., for insulin) or price floors (e.g., minimum wage) that deviate from market equilibrium create distortions. The economy then compensates in unintended ways, such as companies ceasing production of price-capped goods or moving to under-the-table employment to avoid high minimum wages.

When a service like public transit is made free, it removes the financial incentives for efficiency and innovation. Without the pressure to compete for customers, bureaucracies swell, quality degrades, and problems like safety issues increase, ultimately making the service worse for its intended beneficiaries.

The restructuring of the U.S. electricity sector wasn't purely ideological. It was a direct response to regulated utilities making massive, incorrect bets on demand growth, building unneeded power plants, and causing prices to skyrocket for captive customers. Competition was introduced to shift this investment risk from consumers to private investors.

China's economic structure, which funnels state-backed capital into sectors like EVs, inherently creates overinvestment and excess capacity. This distorted cost of capital leads to hyper-competitive industries, making it difficult for even successful companies to generate predictable, growing returns for shareholders.

In an attempt to gain a currency advantage, Caterpillar lobbied the Reagan administration to open Japan's financial markets. This policy backfired, causing Japanese savings to flood into the U.S. and enabling competitor Komatsu to build factories directly on American soil.

Regulatory capture is not an abstract problem. It has tangible negative consequences for everyday consumers, such as the elimination of free checking accounts after the Dodd-Frank Act was passed, or rules preventing physicians from opening new hospitals, which stifles competition and drives up costs.