The place of regulation
Views 56 | Time to read: 3 minutes | Uploaded: 2 - 7 - 2017 | By: Grant Gardner
Ever since the first anti-trust laws and safety regulations were put into place in the early twentieth century, both sides of the political spectrum have argued over the benefits and consequences of these government actions. Just as with any other policy decision, many regulations are passed based off the current political climate and which party maintains power.
This conflict has been brought to the forefront with President Trump’s recent executive order mandating that federal agencies can only institute new regulations if the budgetary change is zero. This directive could have far reaching implications, both positive and negative, which must be examined.
As anyone with a basic knowledge of economics knows, limiting government regulation enhances overall economic growth by affording business more flexibility in their practices and less overhead costs. For instance, former President Obama’s “war on coal” led to thousands of jobs being eliminated and put the entire American coal industry at risk. The increased costs associated with the tougher emissions regulations were enough to bankrupt companies.
However, allowing businesses to operate unfettered also is not feasible. If the economy runs too high without any restriction, like in the 1920s, the inevitable valley of the business cycle will be more destructive, as seen with the Great Depression. This led to regulatory agencies being established, for example the SEC which is intended to ensure ethical business practices and government corporations like the FDIC to serve as consumer protection against bank runs.
Here is where the executive order comes into play. The mandate requiring budgets to stay neutral essentially implements a one-for-two system, in which to institute changes, agencies must remove two old rules in exchange for the new one. While some contend this will lead to abuse of American workers or unethical practices, the negative impact will be negligible.
The bureaucracy of this country is overextended and the amount of regulation far exceeds any other developed nation. There are many outdated or unnecessary measures that can be removed with little to no effect.
By requiring old regulations to come off the books, the operating conditions for businesses become more manageable and new rules cannot be introduced haphazardly. As American businesses receive more flexibility, they can produce more goods or services at lower costs.
These benefits are then passed on to consumers, who can purchase necessary items at cheaper prices. While this may not lead to the four percent annual growth President Trump has promised, it has the potential to make a positive impact and help an economy that is still recovering from the Great Recession.
Although many protest Trump and his policies, it is difficult to challenge his business acumen. After all, it is impossible to become a billionaire by pure luck or accident. Through limiting the amount of government regulation on businesses, President Trump has made his first move towards fulfilling his campaign promise of spurring economic growth by empowering American businesses.
Gone are the days of handicapping corporations by overzealous regulators at behest of the White House. This nation is entering a new era that is pro-American, pro-business, and it may experience one of the biggest economic boons in its history.