Regulation and Growth
For a government setting the level of how much to regulate is seen, on the right as something of a tighrope, and on the left, mostly as something which is required but which has little if any downside … the only question for them is how much and will it be enough to do what they hope (if not of course, more will be needed). This is unfortunate because, there is a very significant downside to setting to high of a regulatory burden, namely it can slow or in some cases completly stifle growth. First off, a little clarfication is needed. The term regulation can be widely interpreted as any government law or prescription. Some regulations then, might be conducive to growth like the regulations establishing tech corridors, which can by local proximity allow synergies to develop between neighboring firms. The common meaning of regulations when discussed in the context of business and growth are restrictions and rules of conduct and practice and licensing requirements. This latter meaning is the one I will adhere to in the following. I should also make clear that there are other private and government protocols which are similar to regulations, but not the sort of thing I mean to discuss here. Those protocols (sometimes government enforced, but more often (?) just agreed upon by industry groups) also are called standards. Standard voltages, connectors, or other specifications (consider the plethora of Internet RFCs for examples). These are protocols which when enforced by law and the government are (again) by definition regulations but serve a different purpose. They are different in kind from emmision limits, testing requirements, minimum price/wage laws, and so on. Read the rest of this entry
