INSTRUCTIONS
Government Regulation of Business and the Limits to Economic Freedom
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This is a graded discussion forum set up for discussing government regulations of business and the issue of whether and to what extent government can and should restrict economic freedom. To receive all of the 25 points for participation in this discussion forum we expect you to do the following:
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response 1
Government regulation of business receives a negative reception from the corporate world yet collaboration between the two sectors is necessary to mitigate the negative impacts of the lack of regulation on commerce. Companies often oppose government regulations, such as tax levies, that might appear to limit their profitability or obstruct seamless operations. Indeed, some government laws might be outdated and, thus, fail to reflect the changes in society. Others could discourage technology advancements and innovations, such as data restrictions hindering research, which could improve the public’s wellbeing (Silberberger & Koniger, 2016). While archaic policies impede economic development, regulation is necessary to foster healthy competition among businesses and protect consumers from exploitative practices.
Governments should restrict economic freedom to develop a level environment for businesses and protect consumers from exploitation. Silberberger and Koniger (2016) claim that a good regulatory framework can improve productivity by allowing companies to operate efficiently. However, while businesses recognize their responsibility to society, they might favor increasing profitability to maintain their position in the market. As they develop strategies to optimize profitability, they might violate laws, abuse labor, or damage the environment. For this reason, there is a need for government involvement in business to guarantee fair competition among companies, safeguard workers’ wellbeing, and protect the environment.
A government can restrict economic freedom in the case where business threatens to harm the environment and the public. It can promote business by providing organizations with financial support or advice in the international economic landscape. Additionally, regulations are beneficial to the public because they allow the government to establish safety policies that protect them from harm. However, when regulating economic freedom, policymakers should avoid overregulation to the extent of impeding national growth.
Reference
Silberberger, M., & Koniger, J. (2016). Regulation, trade and economic growth. Economic Systems, 40(2), 308-322.
response 2
Good day everybody:
We can all attest to some good and bad experiences when it relates to the use of regulations that affect businesses and their economic freedom. In modules 9 and 10 we saw varying perspectives on use or misuse of regulations. We saw articles and presentations by Milton Friedman. In his NY Times Magazine Friedman attempts to convince that businesses social responsibility is only to increase profits. In his presentation at Cornell University, Friedman also compares capitalism and socialism. William Niskanen also makes his points in the article “The Undemanding Ethics of Capitalism” in Cato Journal. Niskanen discussed human interactions in terms of caring, exchange, and threats. He states that Government uses threats of taxes and regulations. It was also interesting to note that history indicates that some of the major atrocities were done by some government or form of quasi government.
Yet, we do see the need for government and their regulations. Clean Air Act, Clean Water Act, Child Labor prevention, and ADA (Americans with Disabilities Act) are just some of the examples where stringent standards are put in place for greater public good. After all government is supposed to protect common benefits and guarantee safety, rights, and basic freedom.
From strictly business perspective one can argue that less stringent regulations and less involvement from government is better for the economy. This may make sense from strictly profits or perhaps on a short-term but may or may not be right in the big picture scenario.
In multiple states there has been a discussion going on regarding the occupational licensing and regulations and the adverse impacts these could create for some of the smaller businesses. I do certainly feel their pain and acknowledge their hardships. From my personal experience working in public higher education operations, I do see the challenges some regulations can present. For example: some of the local regulations for building construction may or may not completely agree with some of the State or Federal regulations. Some of the regulations associated with safety and construction could make the project so costly that it fails to be implemented and thus creates a bigger safety issue. So, there are several reasons and arguments to be made to reduce regulations, bureaucracy, potentially corruption etc.
However, what are some of the implications of not having this oversight or regulations. Ariely’s book “Honest Truth about Dishonesty” was quite amusing. He captured the reader quite nicely, as he presented some of his intriguing observations. He gave us reasons behind our moral imperfections as he provided us with a glimpse inside human psyche and human behavior. With even the best of intentions, there may be instances when people or businesses could violate basic ethics. Alexander Wagner’s TED talk on business ethics shared some staggering statistics of 1 in 7 firms committing fraud. With increased conversation around climate change and social justice, we regularly see the negative externalities suffered by third parties. Thus, some sort of oversight and regulations has a place. Like most things, it is difficult to conclude if regulations are good or bad and how much do we need. We must find the right balance of regulations to continually strive towards the greatest good for all involved.
Reference:
- Ariely, Dan (2012). The Honest Truth about Dishonesty
- Friedman, Milton (1970, September 13). The Social Responsibility of Business is to Increase its Profit – The New York Times Magazine