The following was written by Sam Paul, a student at New Saint Andrews College. If you wish to write something for this website, click here.
The Federal Government regulates five overarching areas of the private sector.
Every business in the country is held accountable to a couple of general truth-in-advertising standards. First, the ads must be truthful. Second, businesses must back up their claims. And thirdly, advertising must be “fair” to competitors and consumers (Whatever that means?). There are also hundreds or even thousands of details behind these standards, but these are the basic standards.
2. Employment and Labor
These laws pertain to minimum wages, benefits, safety and health standards (described below), working conditions, equal opportunity, and privacy regulations.
The Environmental Protection Agency regulates everything from carbon output to whether or not you can build businesses on your property that has endangered species on it.
Laws prevent businesses from spreading your private information, such as social security numbers, addresses and phone numbers.
5. Safety and Health
The Safety and Health Act of 1970 ensures that businesses provide hazard free and clean working conditions for their employees.
Why Regulations Matter: They Hurt Trade.
When governments limit cooperation through trade, they stifle economic progress in a number of ways. (Note: These do not apply to the United States specifically, but in general.)
1. Regulations can limit entry into various businesses and occupations.
In order to open businesses, entrepreneurs first have to acquire licenses, fill out forms, get permission from different bureaus, show that you’re qualified, indicate that you have sufficient financing, and meet various other regulatory tests. (Gwartney, Common Sense Economics)
Additionally, when the government is placed in this powerful situation, the opportunity for political corruption through bribery skyrockets. Look at Peru, where it took 289 days for a 6-man team, working 6 hours a day, to meet the regulations required to legally open a garment store. Ten bribes were solicited from them.
2. Regulations that substitute political authority for the rule of law tend to undermine gains from trade.
Laws need to be specific, precise, and nondiscriminatory. Vague regulatory roadblocks are costly to the economy when certain businesses are restricted and the competition is left untouched. And, when competition is lost, economic growth is lost.
The lobbying that nearly always accompanies these agenda-loaded regulations, whether to increase or decrease the restrictions, also provides more opportunities for strong-arming and undue influence.
3. Imposition of price controls also stifle trade.
Setting a threshold, or minimum, price that a gallon of milk can be sold for only lead buyers to purchase fewer unites than they would otherwise (Gwartney, Common Sense Economics).
Of course, If only one area of regulation were to be revised, price controls should be it. After all, if all the safety/humanitarian/competitive regulations remain — and we pretend for a moment that the statists are right about these regulations — then businesses won’t have many opportunities to exploit the production of their product and sell for a lower price. (Slave labor, and the subsequent lower prices, would remain impossible within our system.)
Price controls aren’t necessary.
Regulatory policies that force traders to pass through various loopholes are almost always counterproductive. Regulations ought to be kept to a minimum because the market is the best regulator.