What do small businesses think of regulations?

✅ All InspiredEconomist articles and guides have been fact-checked and reviewed for accuracy. Please refer to our editorial policy for additional information.

Besides taxes, the most frequently used franken-word in economics is likely regulations. The specter of increased regulations is often thrown around by polluting companies, their lobbyists, and the politicians they support in order to swing public opinion away from environmental and health protections. It works, but I think mainly because it’s a word that most people don’t understand. The assumption is red tape, bureaucracy, and the government monkey on your back. But is that really the case? As a small business owner, I don’t know that my life as an entrepreneur or the growth of my business has ever been affected by regulations in any substantial way (and if it has, I haven’t noticed).

It’s a tricky question, of course, because regulations exist to protect drinking water, and they exist to guide how businesses cater to handicapped customers. In other words, there are a lot of them, covering a lot of different aspects of business, so it’s easy to get confused. In 8 years as an entrepreneur, I’ve had to read exactly 2 regulations, covering about 6 total pages. I’m not unaware that there are industries that are more affected, or that there are regulations that are much more complex. But the entrepreneurs I have worked with over the years have never really held strong opinions on regulations, which prompted me to post an article explaining them in a little more detail.

The U.S. Chamber of Commerce, which represents many large businesses, frequently decries government regulation on principle alone, but without them, how do we keep a company from doing something that unfairly outcompetes with another company and suppresses innovation, or from creating a product so toxic that it makes people sick? As it turns out, the U.S. Chamber of Commerce is overwhelmingly controlled by the oil, coal, and gas industries, and doesn’t really represent American business….only a particular element of it. Massey Energy, a coal company with strong interest in derailing regulations, has had a seat on the board for many years, for instance. Massey, which had registered 1300 safety violations in 5 years leading up to their Upper Big Branch coal mine disaster that killed dozens of coal miners in 2010, would fight regulations for mine safety and clean air laws because, well, they have a vested interest in doing so…it makes them spend money on things like keeping their miners safe and not polluting the air.

In the business community at large, however, regulations are not viewed with quite the venom that they are by the big polluters.

According to a recent survey of small businesses by the Main Street Alliance:

  • 86% say regulation is a necessary part of the modern economy
  • only 14% of small business owners say government regulation is the biggest problem facing their company
  •  78% say that regulation is important to protect small businesses from unfair competition
  • 93% said they can live with regulation as long as it is fair and reasonable
  • 76% say that regulations that are currently on the books should be enforced.

Follow Scott Cooney on Twitter, and/or sign up for our newsletter in the right hand sidebar, for more inspired economist viewpoints.

Photo courtesy of Shutterstock.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top