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On Regulation

We can hear more and more “We need more regulation here, we need regulation there…”, but not many think, including government, about consequences. I am not sure if there any ‘performance studies’ are done on particular laws to assess intentional and unintentional changes laws introduced.

But somehow the majority of people do not realize the cost of new regulations. It is assumed that it does not cost too much unless a new organization needs to be established. But in many cases if a law is introduced, it needs someone to enforce that law, hence, require more spending. Another delusion comes from an assumption that there is no cost if the burden to follow a law is pushed to businesses. While it makes government balance sheets look better, in reality it just hides problems. I can name a couple. With imposing more regulations on businesses, business may decide to move to another country (or area) where laws are not so strict. The result is obvious, less collected taxes in the budget. Another problem, say, a business decided to stay, but because it needs to follow the new law it spends more, hence, pays less taxes. This in turn means we get more and more into debt.

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