Question

What are the reasons behind government business regulations? To what extent are they necessary? Do you think American businesses are over-regulated?

Answer 1

The major reason why government has business regulation is because it is the responsibility of the government to protect the interests of general public. The government is concerned about welfare maximization rather than profit maximization. And thus it puts certain regulation on businesses in order to ensure that the products produced by industries provide maximum welfare to consumers. Also, some sectors like the defense could be sensitive sector wherein it becomes important for the government to keep a close watch on the manufacturers of defense products.

They are necessary to a very large extent because large corporate houses possess extreme monetary and social power, and thus if there are no regulation, it becomes very easy for any corporate house to cheat a small and helpless consumer.

No, American businesses are not over-regulated. A very simple example is that of Gun Industry. In the US, guns are openly sold in the market. Whereas in any other country around the world, guns are not freely available and there are very strict regulations pertaining to the sale of such dangerous products in the market.