Lessons From a Scalper
In 1997, a New York Times editorial argued that New York should more aggressively enforce its anti-scalping law, claiming that it would prevent tickets from “ending up in the hands of price-gouging ticket agents.” The editorial rejected calls to deregulate the market, arguing that deregulation “would only make the ticket-scalping problem worse.” The editorialist was wrong. The wave of deregulation of the ticket resale markets over the last 20 years has brought ticket scalping out of the shadows and onto the Internet, increasing the transparency of the market. Making the resale of tickets illegal or setting caps pushes the market underground where opacity, rather than transparency, rules.
On the day after last fall’s presidential election, the Times argued that “Americans were deeply anguished about their futures and the government’s failure to prevent an economic collapse fed by greed and an orgy of deregulation.” The coupling of greed and deregulation in this way is likely to lead many Americans to believe that the deregulation of markets inevitably leads to the unleashing of the harmful effects of greed. It’s not true: deregulating markets to make them more competitive (and more transparent) is an important tool to combat the harmful (and to promote the beneficial) effects of greed. The lesson of how the transparency of markets thwarted Greedy Guy is an important one to learn at a time when so many people are calling for more stringently regulating financial markets to control the greed of Wall Street.