Just sometimes, can regulation be good for you?
There is often a default setting within business that regulation is a ‘bad’ thing and should be either avoided altogether or made light touch.
In many cases, this can be absolutely the right approach as bureaucracy is often crazy, time consuming and takes energy and resources away from more productive tasks.
But not always.
In some cases, there is a strong argument for companies demanding effective regulation and a lot of companies suffer a competitive disadvantage without it.
Moreover, regulation can protect companies from potential disasters that damage not only their reputation but their share price.
It is unfair to single out individual companies, but BP must look back on their lobbying campaign to avoid tougher health and safety regulation in North America with the sense that in hindsight it was not a wise investment. If they had accepted higher health and safety standards, there would have been costs, but it is possible that they may have averted some or all of the tragic loss and damage caused by the Texas City refinery explosion.
In other words, there is a cost for regulation, but there can be far higher costs of deregulation if things go wrong as a result.
Further examples exist in the area of basic business standards and corporate responsibility. Companies that have an ethical approach to their business and set high standards across the way they operate are probably incurring extra costs.
They reap the benefits in terms of corporate reputation. But their competitors get a free ride. They may not have such high standards.
If regulation sets some minimum standards, the competition would be forced to do at least the basics and the leading companies can still enhance their reputation from going the extra mile.
Similarly, basic regulation can massively encourage businesses and business practices that will be profitable, will enhance economic growth but are also good the environment.
If the EU sets basic standards for C02 emissions for cars or phases out old fashioned energy inefficient light bulbs, then business will respond, the market will operate and businesses that can produce products that meet the standards and which consumers want to buy will grow and thrive and are likely to succeed in world markets.
As long as regulation creates a level playing field, then competition can do its work. (The problem is the unintended consequences of public policy which often mean that the implementation of these policies is flawed, but that’s another story.)
Occasionally, just occasionally, can regulation be good for business?