Benefits of government regulation of business

I want you to imagine something with me, just for a moment. Try to imagine a world without any type of government regulation, but where all of the laws against stealing, fraud, misrepresentation and violence against each other still exist. In this hypothetical scenario, what do you think would happen to us if we did not have the FDA to tell us what was safe to eat and drink, or anyone to protect us from unsafe products? Would we all die? In my personal opinion, the answer is no, we would not. I say this simply because I believe that our current legal system would more than likely protect us equally, if not more, than we are now.

The regulation of businesses by the government is not a new phenomenon. Simply put, the rationale for government regulations is to ensure safety of the public as well as to ensure the success and growth of businesses.

As today’s business climate has become more technologically advanced and more global, some say there is a growing need for more flexibility and less restrictive regulations.

It has been said that government regulations are important for businesses because they ensure best practices at every level of the organization.

The Government regulates businesses for three main reasons:

• Public welfare and safety
• Protection from monopolies and unfair business practices
• Revenue generation

The final part of government regulations I’d like to touch on briefly are the benefits and costs of government regulations.

Benefits of government regulation of business

• Effective government regulations can not only benefit consumers by protecting them from abusive business practices, they also can benefit the businesses themselves.
• They reassure the public, at times, that a particular product or food is safe. Take for example the recalls in recent years of tainted beef, peanut butter, and cantaloupe. When news of this broke, sales of these products drastically fell even for producers whose products weren’t even affected by the contamination.
• Government oversight of the environment, safety, health, financial, and other risks of business activity can safeguard consumers.

Costs of government regulation of business

• For businesses to complying with federal regulations, it has increased their businesses’ expenses by millions of dollars each year. Some of this cost comes out of businesses’ profits, but most of these costs are passed down to us, the consumers, in form of higher prices.
• It can slow economic growth and hamper job creation.
• Regulation requires more resources from a business for the same amount of productivity, which causes an increase in the cost of production, and an equal increase in the price of the product.