Regulation Needs to Be Proper, Efficient, and Sustainable Beyond the Trump Administration
“Lower taxes, less regulation” had long been the battle cry of business proponents. Thanks to billionaire businessman and US President Donald Trump’s moves to end, or at least renegotiate, NAFTA and TPP being anti-tariff free trade is no longer anti-business. Although Mr. Trump’s pro-business, anti-tariff free trade appears somewhat contradictory on the surface, it is important to recognize that not all businesses benefit from the same policies. For small businesses serving their own countries, free trade does not necessarily offer any real benefits. Unfortunately, lower wages and diminished tax revenue strain the communities these businesses depend on to survive by decreasing consumer spending and forcing local governments to raise taxes on a narrowing tax base, which includes increased taxes on local businesses.
If a small business is able to export goods and services, free trade makes it cheaper to access new customers in foreign lands, but it does not mean they will have more customers or sales as free trade means increased competition from global competitors. The greatest benefits of free trade, of course, go to bigger businesses that can cater to a much larger and more diverse customer base. Unfortunately, corporations, which are built and sustained over decades, face the very real hazard of degenerative competition that forces companies to undercut their own futures. Obviously, the biggest benefits of free trade for all businesses are derived from circumventing costs associated with payroll as well as taxes and regulation. Fewer regulations seem to offer undeniable benefits to business, but a lack of proper regulation only further advantages companies that engage in degenerative competition and destructive business practices.
Moving beyond the shortsighted mentality of “regulation is bad,” regulation creates standards by encouraging businesses to avoid displacing costs onto consumers in terms of inferior products, workers in terms of workplace accidents, and communities in terms of environmental and social issues. When established companies with reputable products and services have to complete against a constant stream of cheaper alternatives, which thrive because they are willing to displace harmful costs onto others, market forces dictate sustainable businesses must compete by lowering their costs and standards. Recognizing the abysmal record of developing countries when it comes to intellectual property and worker rights, the kind of competition free trade promotes is not pro-business or pro-community.
Furthermore, regulation is one area where US President Donald Trump is likely going to follow the recommendations of his Right-wing cohorts. If Mr. Trump decides to embrace anything like the extreme policy agendas of the far Right, he will assuredly put himself in direct conflict with liberals, progressive, and moderates. In doing so, he will reduce regulatory costs, but the costs of failing to properly regulate, as well as the political backlash, will pave the way for far more intrusive regulations once government shifts Left again. Exasperating the tendency to over then under regulate will, in turn, generate economic instability and result in costly regulatory uncertainty.
As such, the Trump Administration must not embrace an anti-regulation stance. It must pursue proper regulation. Because the forces of competition continually pressure businesses to cut costs, proper regulation and enforcement are needed to prevent businesses from undercutting public safety. Where pessimists see regulation as nothing more than an unnecessary cost to industry, businesses and industries actually need proper regulation to reduce unforeseen and deferrable costs that will not be realized for years to come, if they are ever realized. Without proper regulation, short-term decisions undercut the long-term competitiveness of businesses that do not embrace necessary standards.
Countries all over the world go through periods, usually during times of great economic growth or periods of prolonged economic stagnation, where regulation is viewed as a sin that inhibits economic growth, instead of an attempt to force businesses to recognize the costs they might displace onto their workers, communities, the environment, and so on. During these times, people advocate for "commonsense regulation" or “proper regulation,” but what happens is all regulation tends to be undermined while regulators grow negligent in their responsibilities. The Trump Administration needs to pursue proper regulation that actually attempts to properly and efficiently regulate. Efficient regulation is regulation that accomplishes its regulatory objective while imposing the minimum cost onto the regulated businesses and industries.
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