In that way, the deregulation process seems to work like pick-up-sticks. There is a very straightforward way of discovering how much deregulation is enough, and that is what the system uses as a self-control mechanism at this point. Nobody likes it very much.
The idea is to treat this sort of system like the system in a thermostat, so that one can arrange the cycle to range around a set point which can be moved up and down; and do so smoothly, without all the hard landings and crashes, shocks and bumps that seem to tag along with the cycle now.
As a computer guy, Ron, you'd probably have a better understanding of self-regulating systems than I do. The question does seem to be which variables are the ones to regulate. Removing the wrong ones will set off the positive feedback loops that can tear a system apart so quickly, which is part of the problem with deregulation per se. Some the regulation keeps the system on track. The question is which that regulation may be.
Interesting, isn't it?
When you think about it, the Black Market is very much dependent on government controls to stabilize the price and demand for their product, and to keep the price artificially high. Without government regulation, many of the Black Marketeers would be forced from business, so the government creates a protected market for the product with room for the principles of Capitalism to flourish.
These controls are sometimes called laws, and they are enforced by the police and sometimes the military powers of government.
Depending on what the black market may be in, and what the actual demand may be, the Black Market substance may have to have more serious controls exerted upon it by having it legalized and taxed. This depends on how the government needs to deal with that market and how the market reflects on not simply the economics but, probably also the political legitimacy of the government.
At any rate, I suggest that black markets seem to be controlled by government regulation and don't serve as a good example of a control free marketplace. Indeed, they are virtually a government subsidized market in many ways.
Over time, the prices in the black market item will stabilize, and no matter how much extra the government spends on enforcement, the return for the government enforcement buck will seem minimal. Actually, it is because a set point will have been reached, and these set points are very difficult to change.
This often works in other sorts of systems as well, such as weight maintainance. As a guy who is circumferentially challenged, I can speak to you with some authority on that subject.