At what point is strict regulatory friction a concern to economic growth?

[Stalker22]

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Well, there is no doubt that there are some EU regulations that have had a positive effect on society, for example, forcing Apple to finally kill the Lightning cable or giving us free mobile roaming across borders. But you are not wrong - when the bureaucracy gets going, it really knows how to turn micro-management into an absolute art form.

It really is the ultimate irony: a piglet needs an ethically sourced chew toy, acoustic comfort and even insect screens on all the farm windows, while you are sitting in a 36°C heritage building, melting into your chair, legally forbidden from installing AC to "save the planet."

[Berry2d]

To an extent I don’t think that stands as a problem to our economy. The most important reasons for the establishment of the strict regulatory friction is create a rigid structure capable of regulating the economic system and not be manipulated by either political interference or any of its kinds.
But since politics is considered a propelling force of economic changes, everything now moves in an anticlockwise direction just because it most be fixed to meet up to desired plans of those in power but never placed in a system where it will be useful to the country's economy.

To me what I see as the problem is not the rigidity of policies but politics, because all policies are made to have an adjustable system where it can accommodate positivity but because of the greedy mindset of leaders it now works in an opposite form.

[Btcdeybodi]

‎At what point do you think that strict regulatory friction becomes a concern to the economic growth of a business, an industry and the country at large?

If businesses are not strictly regulated, there will be many irregularities among business owners. Let's take for example, in the area of pricing, business owners can just wake up one morning and set outrageous prices but with regulations, prices are moderated. Without strict regulations, anyone can just start up a business without any legal documents and many businesses will operate without licenses and proper registration.

The only area i can say that strict regulations hinders economic growth is in the taxation because some big businesses actually pay heavy taxes which is capable of affecting their businesses because a huge side of the profits they made has been used in paying tax.

[Hamza2424]

‎When a business or industry always requires regulatory and administrative permission to move fast, the baseline state of that industry changes from innovation until its proven dangerous, to stagnate until proven safe. This threshold is precisely where productivity growth drops because of the friction of regulatory policies.
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‎At what point do you think that strict regulatory friction becomes a concern to the economic growth of a business, an industry and the country at large?

China, the US, Japan, etc. Not every part of these countries, but bigger cities have systems so smooth that you can easily set up your business and get the required documents without spending much time. I am not from these countries to tell you how smooth it can be, but I am from a country where I know how much time they take. Sometimes they take months to give us an official copy of a document haha. I mean the copy alone.

Some countries have smooth systems only for those who will pay because if you are not willing to pay and want to complete your tasks in a legal and genuine way, then you will be delayed more than the normal time, so next time you won't choose this way. Instead, you will regret your decision and will pay them the next time.

Governments can do a lot if they want. It is just that they don't want to end this suffering for the poor. Mostly they don't take bribes from those who are already in a lot of power and can cause trouble and harm to the whole system. So if you have that much power, you will be given a pass at every checkpoint, but if you are poor, you will be tortured at every checkpoint, every verification post. The clerks, who are nothing and have no such jurisdiction, will cause the most trouble no one could imagine.

[freedomgo]

‎At what point do you think that strict regulatory friction becomes a concern to the economic growth of a business, an industry and the country at large?

Regulations should serve as a means to facilitate industry players in developing their products or businesses within a safe framework. However over time regulations have instead morphed into instruments of monopoly, often under the influence of various forms of pressure. Meanwhile the administrative process for obtaining official permits frequently stalls, causing creative industry players who were initially optimistic to lose interest.

Regulations should aid in the promotion of business sectors so that consumers at the same time will feel that they are safe and not being cheated. They entrusted those regulations and oblige whatever new rules will come out as long as its for the welfare of both, the business entrepreneurs or owners and the consumers themselves.

However, even regulations are being used to masked the private interest of the lawmakers and public officials. People are not actually blind to this, but in order not to be heated by the regulators, they just act as blind to the personal interest of these greedy officials.

[viljy]

Regulation is necessary, as is government intervention in the economy in general (as Keynes insisted in the past). Because unlimited entrepreneurship always ends up destroying everything around itself (figuratively speaking) in pursuit of profit. There is also an antimonopoly aspect for state control of business, which is extremely important for maintaining a competitive environment in the economy.

However, excessive government intervention through excessive regulation stifles business as well as high taxes. When does such a moment come? Then, when a business is forced to spend a significant part of its resources on compliance with regulatory standards, this means increasing its costs. If a business is permanently in survival mode (with minimal profit), then either taxes are too high, or the economy is overly regulated, or all of this together. Actually, I have an example of such an economy right outside my window.

[Emjay24]

As business man my cost benefit analysist is simple, bigger risk bigger regulation cost,  such as petrochemical, nuclear and mining industry will have multiple cost than consumer based industry, no complicated or overlapping authority, the process must have a timeline and certain time process, uncertainty make cost can be calculated or can make unpredictable cost, unstable regulation due to regulations change frequently also make headache due to  increase investment risk, the last when government apply the same rules to all industries without risk  analysis.

This is where I like to come in, it's better to have strict rules which are fixed and effective than to have uncertain regulations for a particular business niche or industry. In fact, with clear regulations, businesses can effectively estimate risks, calculate profitability potential with existing regulations, employ good labour to achieve it's target and create provision for constant innovation. Investors are more prone to patronized economies with clear regulations than those with lots of uncertainty.

The real enemy to economic growth is unclear regulations and uncertainty. Businesses cannot thrive when regulations are unclear, investors cannot estimate risks accurately and labour wouldn't be employed for fear of the unknown. If regulations aren't clear, then the economy wouldn't improve readily because existing businesses cannot plan very well for the future and newer ones cannot establish well where regulations are unsteady.

[Doll2233]

When regulations start protecting an interest system as compared to the public interest, it becomes a concern.  Regulations are there to ensure safety, prevent fraud, it protects workers, and preserve the environment. If they are not there, then businesses gain an unfair advantage over responsible companies.
If companies spend more time dealing with their paperwork, then they are left with less time for spending their operations and economic growth; this is especially harmful for businesses that are at the start-up stage or small businesses that might lack resources to navigate complex regulations.
But at the same time, if the regulations are very few, then it can lead to unsafe products or financial misconduct, or an environment that can harm the economy; then there should be a balance: regulations are clear, efficient, and focused. A business grows best when there is a balance between all of these.

[Taricoins]

Regulation is necessary, as is government intervention in the economy in general (as Keynes insisted in the past). Because unlimited entrepreneurship always ends up destroying everything around itself (figuratively speaking) in pursuit of profit. There is also an antimonopoly aspect for state control of business, which is extremely important for maintaining a competitive environment in the economy.

However, excessive government intervention through excessive regulation stifles business as well as high taxes. When does such a moment come? Then, when a business is forced to spend a significant part of its resources on compliance with regulatory standards, this means increasing its costs. If a business is permanently in survival mode (with minimal profit), then either taxes are too high, or the economy is overly regulated, or all of this together. Actually, I have an example of such an economy right outside my window.

Yeah, it's really important that you highlighted both perspective of the importance and detriments of strict regulations and honestly drastic situations calls for drastic measures, unless the governing bodies doesn't understand what they are doing, they should be able to implement strict regulatory policies that should be sustainable, considering the system of economy they operate, overall stability and growth of the economy.

Definitely this strict regulations will definitely affect the few like the instance you painted out in the second paragraph but if it is important for the growth of the overall economy, actions should be taken.

[YOSHIE]

At what point is strict regulatory friction a concern to economic growth?

When all the compliance costs and delays in bureaucracy are no longer as expected, it can be said that they have exceeded and are no longer appropriate in the market, that's when concerns about regulations hinder economic growth, especially it will incur excessive costs as well as bureaucracy, in phases like this investors no longer trust existing regulations, of course such a situation will trigger inefficiency.

At a point like that, problems will arise where investors carefully withdraw from spending capital, they think regulations are too rigid, of course this sector will trigger companies or industries to stall or slow down, The worst thing is that the workforce is disrupted, this situation will hamper overall economic growth.

[Fiatless]

However, excessive government intervention through excessive regulation stifles business as well as high taxes. When does such a moment come? Then, when a business is forced to spend a significant part of its resources on compliance with regulatory standards, this means increasing its costs. If a business is permanently in survival mode (with minimal profit), then either taxes are too high, or the economy is overly regulated, or all of this together. Actually, I have an example of such an economy right outside my window.

In my country, bureaucracy and red tape are killing businesses. Public servants working in these regulatory agencies always want to go through due process even when they need to make some exceptions. Why do I need to wait for several months to register a business? When neighboring countries are registering firms in a few days. Investors will always move to countries with flexible and friendly laws. Why would gunshot victims need a police clearance before they receive treatment in hospitals? Due process sometimes causes more harm when not applied on a case-by-case basis.

[Swordsoffreedom]

I believe some strict regulatory policies become a major friction that slows economic growth at the exact point where the cost of compliance with the rules outweighs the social or economic harm those rules were created to prevent.

Real problem is not regulation, but poor regulation.

You will find many regulation that build trust in market, reduce fraud, protect property right and create a level playing field for new entrepreneur.

Beside these you will also see some regulation that are so complex and expensive that small businesses struggle to comply. That is why only large company use that opportunity to strengthen their position. In such situation, regulation can unintentionally reduce competition and that protect existing company.

‎At what point do you think that strict regulatory friction becomes a concern to the economic growth of a business, an industry and the country at large?

There are several ways to answer your Q

When you see that the compliance cost of regulation exceed its social or economic benefit then regulation will reduce competition much more than it protect public interest. Again you will see that it becomes very difficult for startups to enter the market. And large incumbent companies can easily comply with the rules. These slow down innovation a lot.

I have also seen that in many places, approval or paperwork increases faster than innovation, then innovative ideas die at the beginning due to fear of hassle.

[Iranus]

‎At what point do you think that strict regulatory friction becomes a concern to the economic growth of a business, an industry and the country at large?

We saw the same thing with Bitcoin. In beginning, innovation was slowed by excessive uncertainty and strict regulation in many places.

But now many jurisdiction are trying to create more proportionate framework for decentralized asset like Bitcoin, while keeping essential thing like consumer protection and AML in place.

You know what I think is the best policy? Don't try to regulate innovation, only regulate the risk.

If any govt provide clear and predictable rule then that economy will move fastest. But businesses also need to be given freedom to choose how achieve that goal.

[SDS11]

Too strict regulation supress innovation, currently happening in EU. For the past decade it is falling behind the U.S. and there is gap between productivity and GDP.

It's clear that enforcing strict regulatory friction will result in stunted economic growth, doesn't matter how you see it but politicians and lawmaker will say otherwise.

Yeah I see what you mean. That regulation versus innovation, debate is loud right now especially with EU versus US.
EU last 10 years, US also last 10 years. So yes, strict regulations adds friction. Friction slows thing down that’s the math. The real problem it’s not regulation bad, no regulation good. It’s bad timing plus bad design of regulation that kills innovation. My take: too little regulation “ Wild West, people get scammed “ too much regulation “everything moves to Dubai, US, or stays as an idea in someone’s garage”. The countries that win are the one that do regulate with a light touch and fast clarity.