Squashed: Business and Regulation

August 17, 2012

squashedcomments:

sds:

squashed:

I keep hearing that regulation is “anti-business.” It makes me wonder exactly what the people raising this claim think of the businesses they purport to defend.

Decent businesses don’t need to worry about decent regulation. If a regulation says you’re not allowed to sell folding chairs that collapse into a death trap when you sit on them, you’re not affected, unless you care so little about your customers that you’re selling death trap chairs to save a couple cents. This regulation doesn’t hurt you.

It actually protects you from unfair competition from the shady guys selling death trap chairs. If you’re willing to spend the money to do things in a reasonably safe manner free from life-threatening hidden defects, you can be happy to support regulations that require everybody to follow minimal safety standards.

This sounds reasonable to an extent—although I’m not sure it’s the government’s responsibility to protect me from the crappy-chair salesman. The market would do a pretty good job of that by itself.

But, just to start discussion, here are some of the more idiotic examples of regulations that I could think of today:

Onerous licensing requirements for professions such as interior design. http://reason.com/archives/2008/11/07/do-you-have-a-license-to-move

FTC Blogger Disclosure Rules
http://sds.tumblr.com/post/147595703/blogger-regulations

Onerous regulations in the Consumer Product Safety Improvement Act
http://www.forbes.com/2009/01/16/cpsia-safety-toys-oped-cx_wo_0116olson.html
http://reason.com/blog/2009/05/07/your-yard-sale-is-illegal

You’re definitely right that stupid regulations are stupid. (The blogger disclosure rule could have been written by Ted Stevens.) There is also definitely a problem of industries using regulation to prevent new entrants from competing by raising entry costs. But that’s not an inherent problem with regulation. That’s more a problem with bad regulation.

I think the solution in most cases is to create exceptions for very small players who are acting in good faith. The Consumer Product Safety Improvement Act, for example, could simply have required testing for larger manufacturers and banned smaller manufacturers from knowingly selling tainted products.

Thanks for the small exceptions in the JOBS act for hedge funds, REITs, and private equity that invalidated almost all of the important investor protections against fraudulent representations in the Investment Company Act, by the way. It’s just a few common-sense exceptions! What could possibly go wrong?

Don’t worry, we just have to stop the “bad regulations.” Sounds like a piece of cake.

I’d like to point out that this is a massive red herring of a debate.

Most all of the evil corporations I work for complain insistently in public about regulations they help craft to destroy any competition or to insulate themselves from liability.

Businesses aren’t in a less/more debate, they are in a mine/yours debate.

(via thecallus-deactivated20130520)

4:12pm | URL: http://tmblr.co/ZmCeYyRcdxvX

(Notes: 53)