Government’s Role in Business

I have a couple of quick disclaimers to this blog post.  First, my blog editor/cousin Eric is now off to Law School at Harvard (hopefully the quality of writing does not drop too much).  Second, this post is not meant to be political but rather philosophical.

I am very grateful to live in America and am a strong supporter of democracy, capitalism, and the constitution.  Having lived, traveled, and done business in various parts of the world I know that our laws, regulations, and enforcement all work to facilitate our ability to build successful businesses.  Without the existence and enforcement of rights, laws and regulations businesses cannot flourish i.e. property ownership, contracts, employee rights, etc.  Lack of proper government involvement often leads to monopoly, black markets, and a struggling economy.

The difficult question is how much regulation and taxes are the optimal amount to allow growth in a free market economy.  We know absolute government control and no government control are both bad solutions.  By increasing government regulation and taxes the government is in essence saying they know how to run a business and understand markets better than business people do. The increased cost to running a business as a result of government makes many of our products and services too expensive to compete in the global market.  I don’t know the optimal mix, but less is more in this situation.   Obviously some industries need more regulation than other, like banking.  I think government should regulate/enforce property ownership, contracts, employee rights, environmental, and national security issues and beyond that the markets/supply and demand can govern.