Government regulation has been criticized by many sectors of the business community. Many corporations and their representatives often complain about government regulations as impediments to profit, economic efficiency, and job creation. Many firms used loopholes to move operations overseas and have violated antitrust law while trying to comply with regulations.
American businesses have experienced both success and failure due to a complex tax code and an increasing number of rules. The relationship between the government and firms can be either cooperative or antagonistic. Notably, the rules protect consumers against exploitative practices. We’ll be looking at some of these regulations below to understand why it can be hard to assess their impact on businesses.
The government makes laws regarding the property. The legal recognition of ownership rights is the key to property ownership. The government creates and enforces property rights through a formalized system of recording and disclosure. This puts others on notice.
Ownership rights are synonymous with ownership and control. All property would be owned by those capable of obtaining or maintaining possession or control using any means, such as force or coercion.
Numerous government assistance programs are available for entrepreneurs and businesses. These include information, money, and services. The Small Business Administration (SBA) arranges loans to startups. It also offers grants, advice, and management counseling. Commerce Department assists small and medium-sized companies in increasing overseas sales.
The rule of law is a service that all businesses often overlook. The U.S. Patent and Trademark Office protects inventions and products against illegal infringement by rivals, encouraging innovation and creativity.
In times of economic crisis, the government may take extraordinary measures to help businesses. Economists believe that the Troubled Asset Relief Program and the Economic Stimulus plan that came after it prevented another Great Depression. Similar to the Coronavirus Aid, Relief, and Economic Security Act, many businesses could stay in business in 2020 despite being prevented.
Others economists argue that the government shouldn’t have intervened in business affairs and that it should have allowed free markets to eliminate bad businesses. No matter what side you are on, the corporate world would be very different without these programs.
The bottom line
The government can friend businesses by providing financial and advisory services. The government can also be a friend to the public by creating and enforcing laws that protect consumers and workers, as well as other laws. Regulators have a history of enslaving nations and causing them to fall into long-term decline.
Because there will always be differences between the different parts of any society, this conflict will not be resolved ultimately. The dual nature of the government’s relationship with businesses could become more regulatory and collaborative due to technological advances. It is possible to keep the government neutral as a referee, despite the changing rules. This could be the key to your success.
The Environmental Protection Agency (EPA).
In 1970, President Richard Nixon established the EPA through an executive order. This agency regulates waste disposal, greenhouse emission restrictions, and other pollutants. The agency regulates the removal of waste materials and greenhouse emissions regulations and controls other contaminants.
Federal Trade Commission (FTC).
The FTC is seen by some firms as a threat to business. It was established in 1914 to protect consumers against deceptive and anti-competitive business practices. These include price fixing, fraudulent advertising, and the formation of monopolies.
Food and Drug Administration (FDA).
Many pharmaceutical companies complain that the FDA delays certain drugs’ approval and marketing. Even though the drug has been proven effective, they often require additional clinical studies. Small firms may be discouraged from entering the market due to high approval costs. The FDA has been criticized for not approving drugs for patients with life-threatening conditions and delaying human trials.
Capture of Regulation
The most significant criticism of government regulations is their potential for the regulatory cap. The agencies that are supposed to protect consumers fall under the control and jurisdiction of the industries they regulate. To benefit favor firms, the regulator might create barriers to entry or divert public money for bailouts.