Government Regulatory I Tervention In Canadian Business

Essay, Research Paper

Government Regulatory Intervention in Canadian Business

It is possible that Canada may be approaching the critical level where the economy is being strangled; where enterprise is re-strained and where entrepreneurship is stifled. But Canada could not dishevel itself that easily. Canadian business will not fall because it doesn’t like a few rules. Canadian business will realize that Government regulations have a positive and effective role in society and should be commended, and not scrutinized. Public choice theory explains that the Canadian Government will always strive for pay, perks, and power, and there may not be much Canadians can do about changing the incentive structure of the regulators themselves. But might it be possible to set up and enforce by law, some principles of regulation to make interference more rational, more effective, and less costly?

First of all, one would argue that the regulatory entity should always be at the lowest level of government appropriate to the problem. This is really a democratic principle, which allows each citizen to make an input on matters that concern him directly. The example, certainly, is zoning for land use. In the area, the example would be garbage collection.

A second principle, but just as important as the first, is to make sure that regulation satisfies some kind of cost-benefit criterion. It is understood, of course, that the regulation should be as cost-effective as possible–that is, of least cost to achieve a particular goal. But is the goal itself worthwhile? Here one has to measure the benefits that can be achieved and compare them somehow with the costs.

Another way to do this is by having people pay directly. Within the next few years, motorists will face not only higher gasoline taxes but also greatly increased costs in monitoring car emissions and in recharging or replacing air-conditioning systems. Perhaps these and similar instances of direct, out-of-pocket costs will lead to a kind of consumer revolution, which in turn can lead to an overhaul and rationalization of our whole system of regulation. Recent history is replete with examples of policies instituted on nothing more than press releases that were not backed up by scientific data. There are many examples where science is ignored or misused in order to push particular policies. There are even examples of where the science has reversed itself; yet the policies march on as if nothing had happened.

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It is easy to see why politicians, bureaucrats, and regulators would oppose such rational approaches to regulation. It would restrict their freedom of action, limit their power, and rob them of demagogic influence.

Government could always create jobs with tax money. For example, for major projects the law requires that government agencies or private firms produce impact statements. The taxpayer or the consumer must pay one group of consultants to write the tomes and then spend more of money to employ another firm to read them. (One group digging holes and another filling them in.) The private sector could have used those funds to employ workers in productive occupations that would have created valuable goods and services, raising people’s standard of living and improving their well-being.

The purpose of regulation is not to “create jobs.” Its announced purpose is to improve human health and protect humanitarian values. But once past the initial level, further rules throw off little benefits. Households could easily take $1500 per year and spend it better on food and shelter and proper medical care. It is well recognized that “wealthier makes healthier.”

In Western Europe during the 18th century it was believed that the natural economic order, untouched by regulations or adjustments, was best designed to produce maximum comfort for all.

The principles of laissez-faire appealed strongly to the growing class of capitalists of the Industrial Revolution. These business owners and merchants wished to be free of government regulation and taxation in order to pursue their own interests. Inevitably, with the tremendous growth of industry, laissez-faire policies led to abuses, especially in the use of child labor. Gradually, more and more businesses combined to control production and prices for the benefit of their owners. This trend toward monopolies, in turn, led to calls for reform.

Throughout the Western world government controls were reasserted.

Laissez-faire is evidence that business cannot prosper as an independent; that, in turn, government policy and intervention is needed in Canadian business to perform the role of “parent.” And as the level of regulation in Canada has grown exponentially, the only thing hampering the country’s progress is the distribution and placement of that government intervention. Everyone requires guidelines in their lives and maybe the millennium year is a good year to birth new business policy. Government involvement is not making ignorant children (small business) more ignorant. It is simply helping it to grow to its full capacity. For as long as the criteria listed are satisfied, Canadians can be confident that regulation is benefiting societ