Business regulation is an integral part of American society. The federal government has been involved in business regulation since colonial times. The struggle for independence came from a need for better regulation of business. Social reform laws were enacted in the nineteenth century, and government involvement in business continued to expand throughout the twentieth. But how effective are business regulation laws? The answer depends on the nature of the business. Let’s consider a few common forms of business regulation.
Overregulation of small businesses affects free enterprise and undermines economic growth. The cost of government regulation to small businesses is far higher than the benefits they bring. A 2015 NFIB study estimated that the cost of compliance with federal regulations disproportionately affects small businesses. Small businesses face a multitude of state regulations. A study of business regulation by the NFIB found that overregulation in Washington has been the number one cause of bankruptcy for small firms.
Open government is a key component of good business regulation. Transparency and participation in the regulatory process ensures that regulations are in the public interest and are based on legitimate needs. Open government means allowing for meaningful public participation and comment. It also means ensuring that the regulations are easily understandable and that all parties understand their obligations and rights. Furthermore, open government fosters better collaboration between regulators and stakeholders. A regulatory policy that works well can improve the economy and increase profits.
Cost-benefit analysis is a key part of effective regulation. This type of analysis should be integrated into the policy process early in the process. The aim is to measure the effectiveness and efficiency of regulation. It should also identify alternatives to regulation and weigh the tradeoffs of each approach. A systematic programme review of existing regulations can help governments decide which approach is best and what regulatory tools would provide the greatest benefits for the lowest cost. In short, it is essential to have an informed and unbiased view on the effectiveness and cost-benefit tradeoffs.
A more inclusive N&C process should benefit both governments and SMEs. Participation through digital N&C portals leads to substantive change in legal regulations, which in turn makes the acceptance of regulatory constraints more palatable. In addition, a more inclusive process should result in a greater voice for SMEs. The more inclusive and transparent this process is, the more positive the public’s perception of business regulation and the more effective its implementation is.
A significant change in business regulation is a shift in government policy. The Patient Protection and Affordable Care Act defines major rules as those with an effect on the economy of $100 million or more. In addition, major rules must affect specific industries and competition, while affecting the ability of U.S.-based enterprises to compete with foreign ones. By establishing a clear definition of major rules, Congress can then decide whether or not to implement them. The goal is to ensure that federal rules are beneficial for all Americans.
