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Comment by Intermernet | Hacker News Reader

Australia's startup scene is doing ok, but the funding model is lacking. There are a few reputable VCs, and very limited government funding. I don't think it's regulations that are cramping Australian startups, I think it's more lack of investment from both private and public sectors. I know many people who are running successful startups in Australia.

I'd argue that having a system of lobbying government and lax rules on political donations would have a much greater effect on stymying competition. It seems that monopolies in the US are very much protected by a lack of regulation on political donations rather than too much regulation.

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> I'd argue that having a system of lobbying government and lax rules on political donations would have a much greater effect on stymying competition.

Interesting. My belief is that regulations are the most harmful since they raise barriers to startup competition and thus protect monopolies (since startups, due to their hunger, are the most important source of competition in a market - incumbents usually end up in monopolies and cartels instead). We're seeing that here in the EU every day.

But let's explore your point: how exactly do you think lobbying and donations are stymying competition? What's the mechanism at work?

The mechanism is as old as the hills. You pay for favourable conditions for your business, and unfavourable conditions for your competitors. Australia has a classic history of political figures being given very comfortable jobs in the private sector after they've greased the wheel for their largest donors. This applies to tech, communications, finance, property development and probably every other money making sector.

When contracts are awarded to companies based on lobbying and donations it stymies competition.

The following quote is from the report linked at [1]. It's worth reading the entirety of that report.

"the growing politicisation of public service, exemplified by political appointments to government bodies (Griffiths et al. 2022), may spill over into the contract market. Links between politics, donations, and contracts may negatively impact competition and firm entry".

[1]: https://e61.in/wp-content/uploads/2023/07/Political-Economy-...

What you are describing is how governments prop-up incumbents. But this rarely apply to startups, who seldom stand a chance at getting government contracts and the like. Entrepreneurs will ignore those and build the startup from the bottom up, with small customers first.

Of course a less corrupt government could help here, like the x-prize helped SpaceX and electric car subsidies helped Tesla. But that's too much to ask from politicians of most countries.

To actually prevent startups competing and disrupting the market, I maintain that regulations are much more effective: they will prevent entrepreneurs from even thinking of entering and competing highly regulated domains. See the three canonical examples (health care, education and housing) where high prices and scarcity are the name of the game.

I think we're debating around the actual core of the issue: Regulations are only as good or bad as the content of the regulations, and corrupt governments can (and do) ignore and enact regulations at their pleasure.

Ideally, regulations can promote startups and overall market competition. We do see that ideal in some Australian regulations (and I would guess in most countries) but regulations are decided by the government, and that means that their enforcement (or lack thereof) and intent is often pro-incumbent.

I still maintain that regulations on political lobbying and donations would go a long way to open up the playing field for startups. Unfortunately, I don't see any evidence of any political party in any country doing more than pay lip service to actually doing this.

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