Regulating Versus Suffocating Businesses

First Published: 2011-11-06

First published in The Tribune, Friday, November 4, 2011 and posted here with the kind permission of the author.

Personally I’m not in favor of regulating business, although I am in favor of generic controls like health and safety, paying taxes and being fair and honest generally. Beyond that, as far as I am concerned all that regulation achieves is to push commercial expenses (and prices) higher, while feeding fat cat tastes for corner offices and foreign business trips. Besides, bribes are cheap and welcomed by many bureaucrats, and that’s a fact.

You may recall a spat I had with some estate agents recently. Now I’m not saying for a moment that they are not honest and well-meaning fellows, although I did wonder why they found it necessary to try to expand their remit, when they already have so many members in an overtraded industry.

Decades ago, when New Zealand was in serious economic trouble, the government hired a brace of business consultants for advice. “Tell us what you’d do if New Zealand was your business”, they asked. Would you be surprised to know what they were told?

Deregulate – Your laws are clogging up the wheels of commerce, and making it harder to trade Facilitate – Your job is to lubricate the market with opportunity, so business can make the profits that pay the taxes that fund your programs. Why are you finding things that stop this happening?

Say Yes – Get rid of the notion that civil servants are in charge, and that their job is to be obstructive in terms of their own rules. Teach them to be supportive instead.

The rest is history of course, and today New Zealand (another isolated island nation by the way) has a robust economy that others envy. Newbie business people register instantly on the internet there these days. Moreover, different departments combine in single conveniently-located offices, so income tax, employee and other enquiries can take place across a single desk.

Malaysia, which has been surprising people recently, took this a step further by merging company, social security, tax, and employment fund registrations into a single electronic process. Just imagine how much different things would be here too, if walls came down, and vested interests were slapped down as well.

I heard of a fellow who went over to the UK to establish a branch of his business there. When he registered for tax he asked for an explanation of the system. Would you believe they provided him with two inspectors for the morning, and that their opening words were “you don’t have to pay more tax than is absolutely necessary sir, and we’re here to show you how”.

I guess this has a lot to do with reintroducing old-fashioned government civility. My grandfather was a civil servant. My dad told me he was required to sign his letters off by writing I am, sir / madam, your obedient servant above his signature. Now that’s a way to get the role of regulators right – who’s supposed to be in charge?

Simon Cooper is a founding partner of Res Socius, a business brokerage firm authorized by the Bahamas Investment Authority that facilitates the sale and purchase of businesses. Contact 636-8831 or visit www.ressocius.com.

Help support The Nassau Institute