It's very easy to see why that's a problem. But it should be equally easy to see the long-term results when we attempt to use the strength of government to ensure market outcomes. It doesn't take long for the regulatory agency to wind up working for the goals of the very entities they're intended to police. This is called Regulatory Capture, see http://en.wikipedia.org/wiki/Regulatory_capture .

This isn't a problem of bad politicians or people not trying hard enough to solve the problems. It's fundamentally implied by the nature of the beast. We need to have experts in the role of regulators; but where do experts come from, except from experience as past workers in those industries? This is all basic public choice economic theory. No amount of voting for the right candidates, or carefully crafting the regulations is going to get around the problem.

Yep, there are problems there too, the point of my post was to refute the parent's opinion that the market would naturally take care of it.

I'm afraid I don't have a good solution short of some way of screening for only people who are allergic to cronyism.

Thanks for the link on Regulatory capture, I didn't realize that that phenomenon had a name, but I'm glad it does. It's one of the more infuriating things about the US government and the SEC in particular when it seems to handle lots of things with kid gloves when they should be prosecuting them with all the zeal they seem to have for prosecuting minor drug dealers.

I don't believe the "market" will naturally take care of it. You're looking at this through blurred glasses. People, not markets, will have a choice (if they so decide) to use or not use something. Buy or not buy something. That is their power and we have copious examples through out our history of this indeed working should enough people get together and want to make this change. Again, we are talking about a private company (Facebook) who relies on these very same people for it's success, this is NOT a reference to a form of government that is running out of control. We've seen FB change in the past (see my previous comment), no reason for them not to do the same in the future should WE decide they need to.

There is a huge difference.

I'm not. The boiling frog principle still applies. The revolutions you're talking about require people to get together and foment them, and I don't think it will happen at sufficient scale for FB to care, or to prevent them from having a very large negative effect on society.