Does the US Government go too far in the regulation of businesses?
In today’s globalized economy, the core driving principle in the regulation of businesses and enforcement of laws and reforms is customer protection (Vogel, 9). In fact, the modern business regulation in the global arena continues to be a matter of debates. In United States, neither the government nor individuals take lightly the control, regulations and monitoring of businesses by the federal and states governments (Foss, 2). Essentially, the current government regulatory mechanisms are argued as to be too far in the regulation of businesses. Accordingly, the Obama administration has initiated many businesses regulations, commissions and systems depending on the industries. Usually, business regulatory departments and the federal government monitor the regulation system that protects the interest of customers and the economy at large. Regulatory system must be compatible to consumers’ needs and a well-structured free market mechanism. This paper intends to bring forth and asses the current regulation of business and free market by the United States government. The paper highlights on whether the federal government has gone too far in business regulations.
U. S Government regulation of businesses
Since olden days, governments have regulated and monitored business progress within and abroad. Establishment of federal government and the states government was driven by the agenda of business regulation. According to Foss 6, Industrialization of United States economy and the process of becoming super power country, government passed laws to govern behaviors of small and big businesses. In addition, after the Second World War government involvement to business regulation expanded rapidly. Early y1970’s, both industries and the civic in U.S called for reduction of regulations (Vogel, 10) Lack of federal interventions into business practices causes rampant corporate scandals and economic development derail. Economic development can be boosted by excellent trade laws and regulations (Vogel, 9). Similarly, thriving business and trade enhance the economic growth and development progress of a country. Conversely, too much regulation in trade tends to reduce investment motivation and incentives to economic growth.
United States business regulations are perceived as too far by economist and business accountants. Too much regulation into business by government targets to improve fair and truth financial reporting. On the other hand, regulations put loops holes to affect financial transactions and business improvement. When businesses encounter turbulence, business regulations suffer. Corporate failures and rampant unsound strategies are connected to United States streamlined regulations, more regulations and reformed regulations approaches (Boozell 5). For example, United States regulation on insurance business has suffered a big blow connected to too much regulation. Insurance industry in the country has been caught up by most regulation debates due to financial crises and potential recessions (Boozell 5). Again, current states and federal regulations into business practices its sometimes contradictory and confusing to business fraternity. In fact, the regulation is loose and the country depends on decisions of private firms influenced by the acts of regulation. In addition, some business sectors like industrial homework and day care are greatly regulated by states governments. Experiences in U.S business regulations effects are numerous and diverse. The government proves to engage into too much regulation to business practices. States such as Illinois and California have engaged to highly detailed regulations to business activities. These regulations further sacrifice the quality or consumer safety and health (Boozell 8). As indicated by Boozell 5, Regulations provide useful information and direction, yet the amount of time-required turn to be inversely related to the quality addressed by the regulatory frameworks. Private entrepreneurs comply with individual requirement rather than complying with the regulations standards of quality.
United States business regulation remains to be fourth pillar for economic development. Federal government pumps in increased budgets in regulations year after year. Regulations to business practices in all industries appear to cost the federal government 19 percent increase per year in regulation costs (Carroll & Ayala 12). Regulations budgets in United States should be cut off to become more effective. According to U.S Competitive policy council report, too much business regulation affects significantly companies’ competitiveness (Carroll & Ayala 12). This means there is a positive relationship between government business regulation and industrial competitiveness. Political criticism and debates on government regulations in United States further heighten the impacts of regulations to business competiveness and incentives. Moreover, effects of regulations on United States businesses are contributed by lack of reliable information and data causing contradictions on efficiency and distribution focus of businesses.
United state federal government continues to expand its business regulation approach since the amendment of Sherman Acts and other anti trust laws. The increasing regulations need to be addressed to protect interest of consumers, entrepreneurs and cut down regulation costs. Excessive business regulation in United States is persistent and this can result into inflation or political wrangles. Deregulations can conversely reduce huge budge costs and curb inflation in the economy. In essence, regulatory system must be compatible to consumers’ needs and a well-structured free market mechanism. The federal government has increased regulations and use of heavy budget to finance regulations. Other regulations practices have failed to achieve objectives causing decline in competitiveness. In this regard, U.S Government has gone too far in the regulation of businesses.
Boozell, Mark. Future of business discipline regulation and oversight of insurance in United States. Illinois department of insurance. (2004). Retrieved from http://www.naic.org/documents/topics_white_paper_pia.pdf
Carroll, Elsie & Ayala Sofia. G. Regulation and Competitiveness of U.S. Businesses Is It Time for a Competitive Impact Statement? (nd). Retrieved from http://www.ic2.utexas.edu/dmdocuments/echeverri-2008-Regulation-Competitiveness.pdf
Foss, Murray. Does Government Regulation Inhibit the Reporting of Transactions Prices by Business? (nd). Retrieved from http://www.nber.org/chapters/c7808.pdf
Vogel, David. National Styles of Business Regulation: A Case Study of Environmental Protection. New yolk city: Beard Books, 2003. Print.
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