As someone of Catonian persuasion, I have a general abhorrence to most regulations. I firmly believe that regulatory interference on a free market will almost always cause a corresponding, and usually negative and unexpected, effect elsewhere. Raise the minimum wage and GM-like companies that still believe the fantasy that labor is their primary and most controllable cost will shut down and move elsewhere… leaving people with no wages. Near the pinnacle of regulatory muda is our convoluted tax code, comprising of thousands of regulations trying to distort or engineer just about every social and economic aspect of modern life. This gives meaningful employment to a million or two tax attorneys and CPAs, and requires a collection and enforcement effort that costs more than the GDP of some countries.
But before you blast me about making excuses for poor corporate performance, realize I’m not. Although NAM may occassionally want us to believe it, the regulatory environment is still a ways down the list of reasons why many U.S. companies can’t compete. And there are appropriate ways for the government to kick-start appropriate action… but with a carrot instead a stick. Funding the MEP’s to help increase industrial competitiveness is one positive example. Investment in research into beneficial new technologies, especially where the time horizons are longer than average, is another.
You can see the results of some of this absurdity in your local workplace lunchroom. Take a look at the employee information posters that you are required to buy just about every year. A couple years ago the poster was small enough to fit in the nice glass case. Now it requires a chunk of the wall, plus a duplicate version in Spanish… although in this case the employees are required to know English so they can fully understand the procedures that are required by the FDA. How much you want to bet that fewer people read the War and Peace version compared to the old Jack and Jill version?
Similarly, how many of you Californians actually read the long Proposition 65 warnings you see on basically every building entrance, gas pump, grocery store, chain saw, and even fishing rod? It is a rather complex and somewhat vague law supporting our propensity to be a nanny state, which therefore has created hundreds of private organizations to help businesses navigate its mundane complexity. Which then even prompted the government to create a special "Proposition 65 in Plain Language" website. All for something that no one reads. I wonder how much all of this costs… both us, and us indirectly via increased business cost. Yes I know that drinking bleach is harmful. If I don’t, well… I guess I should be nominated for a Darwin Award.
The cost of these regulations is not at the top of the list of competitiveness inhibitors. Toyota and Honda in the U.S., HON, Wiremold, and other top notch lean companies comply every day and beat the pants off their competitors. But as we work to drive waste out of our companies in order to become more competitive and efficient, a similar effort needs to take place within government. The Citizens Against Government Waste is one organization that is focusing on wasteful programs and spending, and the Council for Excellence in Government is another that is working to create results-oriented performance leadership and internal efficiency at all levels of government.