Why do we have regulation?
The federal government is sometimes criticized for enforcing too many regulations on business and personal activities. There are many types of regulations. Some, like rules for how cars are built, are intended to keep people safe. Some, like rules governing sales on the stock market, try to enforce fairness in economic activities. Another area of regulation is for protection of the environment.
Are regulations good?
Probably some are good and some are not. How would we decide? One way is to think about the benefits and the costs of a regulation. If the benefits are greater, the regulation would be good. If the costs are greater, it may not be. There may be problems with this method, though. For example, the benefits and costs may be hard to determine. We could calculate the cost of a regulation requiring automakers to install extra brake lights on cars, but how would we calculate the benefit of fewer injuries and even deaths from wrecks that don’t happen because the lights make driving safer? Even harder to calculate would be the benefits from regulations preserving national parks. How would you value the enjoyment people experience from visiting? Even if the purely economic (counted in dollars) cost of a regulation seems high, perhaps sometimes the social benefit would still make the regulation worth keeping.
Is cutting regulations a good thing?
Sometimes yes. Sometimes no. If the cost is greater than the benefit, maybe we should eliminate the regulation. Or maybe not, depending on any possible intangible social benefits from the regulation. Certainly one cannot say “cutting regulations is good” without carefully considering all the costs and benefits. What do the regulations achieve? What will we gain and lose by cutting the regulation?
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