Hypothesis of the Day – Regulation of economy favors big business
From Gongol…
Regulation of an economy favors big businesses over small ones, because big businesses have the resources to influence lawmakers and regulators (through lobbying and other efforts) as well as the wherewithal to manage complex regulations with attorneys and accountants; whereas small businesses would tend to suffer more from regulations since they lack the same resources.
Via Newmark’s Door
I totally agree. I deal with this every day. But the flipside, of course, is allowing free and fair competition. Regulation is also supposed to protect competition and prevent monopolies. This isn’t quite a rhetorical question, but: How much regulation is enough and how much is too much?
Comment by Väinämöinen — Tue, Jan 10th, 2006 @ 3:59 pm
Yes and no. It obviously depends on the regulation. The less regulation there is the more bullying there can be as well. Remember, regulation can also protect small businesses. Without it, big companies with clever accountants to do just about anything as you saw with Enron, Worldcom, Parmalat and so on.
In Finland for example, there are a bunch of benefits small businesses have over bigger ones and if you mean one person businesses things are much better still. There are all kinds of incentives and tax benefits you can get until you’re doing well.
Of course if what you want is streamlined, dynamic businesses there’s an issue. There are huge cost benefits to be had from being big – see Walmart. Small companies are usually less efficient so it’s not actually desirable to have them in an economy. One they have some success and grow they are usually snapped up anyway.
Comment by jdsm — Tue, Jan 10th, 2006 @ 6:12 pm
It’s not just that big companies have cost benefits, smaller ones have them too. Management overhead, etc. There’s an optimum size for a company in a given business.
Comment by Topias — Tue, Jan 10th, 2006 @ 6:57 pm