Big Business and Regulatory Double Standards
By Bryan Caplan
Many of our regulations apply to big firms more strongly than small
firms, and and even less to homes. For example, many regulations apply
only to firms with more than a certain number of employees…
When I asked my enviro econ students to explain weaker home trash
rules, some said firms care only for profit, while homes care about the
environment, so homes don’t need rules to do the right thing. Others
said the opposite, that homes rebel more against strict rules, such as
by tossing trash in the woods, while firms are more obedient.
Now it seems to me that bigger orgs are in fact easier to monitor
and punish, which can justify stricter rules when such rules are harder
But this is only part of the explanation. Firms obey trash rules in
large part because we do random inspections of firm trash, yet would
not tolerate random inspections of home trash. Big orgs are favorite
movie villians, and people seem to demand higher wages to work for
them. It seems we love to hate and distrust big orgs, relative to small
orgs and individuals.
And this seems objectively unfair; big firms make it easier for us
to monitor and discourage them from bad behavior, yet we reward this
help by taxing them more, and imposing more burdens.
Of course, this doesn’t mean that regulations are invariably tilted against big business. My point, rather, is that many important regulations do discourage bigness, so the net effect of regulation on the size and number of firms is hard to unravel. Careful empirical work might yield credible answers. But the most basic level of care is to admit that there are heavy government hands on both sides of the scale.