Thursday, March 16, 2017

Good companies benefit from good regulations

The New York Times had an article on a small group of business in Toledo that thought less regulation would help their businesses.

See “The President Changed. So Has Small Businesses’ Confidence”, Landon Thomas Jr, 2107-03-12

Many people fail to realize that government makes businesses run more smoothly because it levels the playing field by keeping other businesses honest.  Government is the force that reduces externalities.

Does a quality restaurant want to compete with a sloppy restaurant that has unsanitary conditions, pays extremely low wages, and just dumps its garbage anywhere.  Food inspections have saved lots of lives and protected other restaurants from unfair competition.

Does a trucking company that follows safety laws want to compete with a company that overworks its drivers who are encouraged to speed.

Does a quality manufacturer want to compete with a manufacturer who cuts costs by avoiding a lot of safety practices?

Does a food processor want to face a law suit from a person who has a really bad reaction because the company didn’t follow government labelling regulation?

Does any company want to do business with a bank that doesn’t keep a government-mandated reserves?  It has happened over and over again that people and companies have lost a great deal of money when a bank went belly-up.  The Federal Deposit Insurance Corporation (FDIC) has certainly reduced the losses of many a company.

If a government didn’t enforce certain standards of safety and fiduciary responsibility, would more businesses be looking at costly law suits?  By showing that they were making every effort to follow the regulations, wouldn’t they blunt these suits, especially if they kept good compliance records.

And well-run companies will also pay less insurance than their slap-dash competitors.

Oh, yes, I almost forgot patents and copyrights.  Boy, lots of companies would be screaming bloody murder if their intellectual property wasn’t protected by government registration.