The anti-business regulation myth...

I long ago learned, over 30 years of working in business journalism, that the one thing businesspeople hate is uncertainty. That's it.

Natural disasters, coup d'etats, abrupt and drastic changes in regulatory regimes about which they've had no warning, that's nerve-wracking. An onerous status quo, not nearly so much, as long as they know what they're dealing with.  

Businesspeople can cope with tax regimes that ask them to pay their fair share, with stiffer board of directors oversight of the CEO, with having to give state enterprises a cut of the action (usually 50%) and a whack of their proprietary technology in order to crack Chinese and other offshore markets, and with regulations. Indeed, for the sake of obliging all players to follow the same rules, business leaders generally crave regulation. And, of course, many regulations create new business. For example, requirements that power utilities upgrade their facilities to be less polluting is a boon for makers of "smokestack scrubbers" that remove toxins from power-plant emissions.

Regulatory reform - the creation of new regulators and revamping of existing ones to perform more effectively - is so much a part of the Obama agenda that Bloomberg BusinessWeek sees profit to be had from launching a quarterly magazine insert on the topic, called The Regulator. Which asserts that:

Executives complain about unelected bureaucrats complicating their lives and siphoning profits. Yet most large corporations long ago learned to live with regulation. Sometimes they even demand it. "Everyone thinks the business community hates regulations. Not only is that not true, it couldn't be further from the truth," says R. Bruce Josten, the U.S. Chamber of Commerce's top lobbyist...

Companies such as Archer Daniels Midland and Cargill are asking regulators to rename as "corn sugar" the oft-maligned sweetner known as "high-fructose corn syrup." Industrial consumers of electricity such as ExxonMobil, Dow Chemical and Alcoa want Washington to re-regulate power markets. And utilities Duke Energy and PG&E [Pacific Gas & Electric] last year backed climate change legislation to dispel the uncertainty complicating multibillion-dollar investments in new plants.

To be sure, industrial polluters lobby for the right kind of regulations, and the Sierra Club, for its part, also lobbies for the right regulations. That's how Norman Augustine, then-CEO of defense contractor Martin Marietta Corp., itself a major lobbyist, could ask "How did Washington end up with more lobbyists than Cairo has flies? Cairo got first pick."

So, business whinging to the contrary, regulations are dearly sought in hopes they will benefit one special interest or another, or at least "level the playing field" for all participants in an industry. Far worse to most businesspeople are regulations that are enforced sporadically (which makes their occasional enforcement seem arbitrary) or are enforced selectively - on certain polluters, while others are given a free pass for reasons unknown. Far worse, also, are "anything goes" zones in the economy where there are no regulations, and competitors are constantly blindsided by rivals operating according to rules of their own creation.

"Regulation" has come to mean protecting consumers from price-gouging and defective products, protecting the natural environment for the welfare of all living things, protecting employees from unsafe workplaces, and so on. Regulation, dating from pre-Colonial days, has also always meant protecting businesspeople from each other. It has also meant carving out special advantage for certain industries through lobbying and campaign and other payoffs - corruption, in other words, that must vigilantly identified and eradicated. But regulations themselves - or "regs" - have always been principally a safeguard for all participants in a free market.

As any candid businessperson will tell you.

 

 

Comments

[Boff]

The Republican message has been that Obama-enabled regulatory overkill is stifling jobs growth. Is this merely a tactic that they think they can get away with? Or is there another agenda that Republicans are paid to promulgate?