Regulations are good for consumers AND business
BusinessWeek has a provocative article up titled “The Regulator: Why Business Loves Rules (Really).” It highlights a lot of the ways in which effective regulations can benefit not just people (for whom regulations provide protection from abusive business practices) but the companies themselves.
Among the reasons why regulations are good for business are reassuring a skeptical public that a product or industry is safe. BusinessWeek notes that after the string of recalls of tainted eggs, peanut butter, and spinach, sales of those products declined even for producers whose food wasn’t contaminated. (We noted a similar finding about the toy recalls of 2007). A stronger FDA (or CPSC) not only prevents a business’s customers from dying, it will convince them that the products are safe to consume.
BusinessWeek notes other positive results of regulations, including the growth of new industries in response to compliance requirements, such as manufacturers of emissions-control scrubbers that help businesses adhere to clean air laws.
The article does a good job of breaking down the simplistic reduction that all regulations are bad for business and jobs, a canard that Public Citizen and others are fighting. As years of data compiled by the Office of Management and Budget show, the benefits of regulations greatly outweigh the costs (for the previous decade, the estimated costs of major regulations were between $43 billion and $55 billion; the estimated benefits were between $128 billion and $616 billion). It’s nice to see a business-friendly periodical note that even businesses see these benefits.