It usually stifles innovation and expansion by the private sector. Government intervention through regulation also cost jobs. Witness the Government’s proposed regulation of the internet:

Proposed regulation of high-speed Internet service providers by the U.S. government could cost the economy at least $62 billion annually over the next five years and eliminate 502,000 jobs, according to a study released by New York University Law School.

The report estimates that broadband providers and related industries may cut their investments by 10 percent to 30 percent from 2010 to 2015 in response to additional regulation. At 30 percent, the economy might sustain an $80 billion hit, according to Charles Davidson, director of the law school’s Advanced Communications Law & Policy Institute, which released the report on June 16.

“There will be follow-on effects in the whole ecosystem,” said Bret Swanson, president of technology researcher Entropy Economics in Zionsville, Ind., who co-authored the study with Davidson. “A diminution of investment by the big infrastructure companies will reduce network capacity, new services, and investment by all the ecosystem companies,” such as application providers and device manufacturers, he said in an interview.

On June 17, the Federal Communications Commission is set to vote on taking public comment on Chairman Julius Genachowski’s proposal to give the agency greater authority over broadband service providers such as Comcast (CMCSA), Verizon Communications (VZ), and AT&T (T). The agency wants the power to impose so-called net neutrality rules that would require providers of traditional broadband and wireless services to allow all applications and devices onto their networks. In April, a court ruled that the FCC currently lacks the authority to impose such regulations.

Translated, the average internet user, someone like me, will use the internet and get less for more money.