Government RegulationThroughout history there have been many different opinions aboutgovernment regulation.
Some believe the government regulates business too muchothers feel that the government does not do enough. I believe the government isregulating business far too much and furthermore putting businesses out ofbusiness and causing many workers to lose jobs. In this paper I will point outthe common problems dealing with government regulation. I will also focus onthree major aspects of government regulation which include: 1) regulationinterferes with production by halting innovation and discouraging risk taking,resulting in declining employment, 2) government over regulates by settingstandards for every aspect of manufacture when it could allow businesses to setoverall objectives for their business, 3) regulation cost too much in businesscompliance, which is passed on to the consumer and finally forces the companyout of business. The objectives of safety and health will better be achieved inthe absence of government regulation.
Government regulatory agencies have spentbillions of dollars and there is little evidence that the world is any betteroff than it was without the agencies and costly reforms. When reading furtherask yourself the question, does the costs or regulation out weigh the benefits,I believe they do not.Regulatory programs normally are started by a group of people with asingle interest and pressure the government and people to believe that there isa major crisis, creating panic to an alleged problem.
When this happens itpressures Congress to pass a reform law in fear of not being reelected. Mediagroups also aid in creating panic by focusing on the bad and not the possiblesolutions to fix the problem. What happens is Congress passes a reform thatthey have little thought over and create costly new standards that could makelittle difference in the world. A good example of this happened during theadoption of the auto emission standards of 1970.
When Congress passed a billwith little debate and few people having any idea on what the bill was about,creating costly reforms and forcing cut backs on business expenses. In all ofthe cases of 1970 the Congress chose to regulate instead of the alternatives;court penalties for polluters, tax penalties for employers with poor safetyrecords, or government-funded information programs. ” If the health and safetyregulators were created in response to nonexistent crises, it is not surprisingthey have made little impact on morality rates.”(Crickmer 1980)Sam Peltzman, University of Chicago economist, did a cost-benefitanalysis of the drug regulations that followed the thalidomide tragedy in Europe.In his analysis he focused on the Food and Drug Administration (FDA) which isalike the older single-industry regulators and some of its problems are typicalof most health and safety regulation.
He found that the new drug laws werecosting far more than the benefits achieved. In Britain more lives were beingsaved than in the U.S. due to the fewer restrictions on new drugs unlike the U.S.which have conservative policies towards new drugs.Regulation interferes with production and halts innovation and risktaking resulting in declining employment.
This is to say, because of regulationcosts, the businesses do not have enough money to invest in taking risks withnew ideas and technology. This does not allow the company to expand and hiremore workers. Regulation over regulates by setting standards for every aspectof manufacture rather than setting overall objectives that businesses could meetin whatever ways they devise. This would allow companies to focus on theproblems at hand rather than spending money for the mandatory regulatory reformsthat do not apply to their business.
Regulation costs too much in businesswhich is passed on to the consumer, and in increased government payrolls. Ifthe regulation costs were cut back it would allow businesses to lower theirprices and allow a fair price for the consumer. In some cases governmentregulation will drive weak companies out of business and the standard of livingof those affected will go down.As you can see, the objectives of safety, health, and productivity willbe better achieved in the absence of government regulation. With lessregulation businesses will offer more and better technology, improved drugs tocare for the sick, and allow a greater employment rate.
In governmentregulation the costs do not out weigh the benefits and unfortionatly do moreharm than good.