Too Small to Comply

Big businesses probably wouldn’t mind
less government regulation so they could
do what they want in order to make profit.
However, big businessess also have a reason
to be content with regulation, particularly
if it is complicated regulation.
The reason is that big businessess are,
by definition, big. That means they can
afford to hire a lot of people. Some of
those people will be lawyers and others
with expertise in dealing with
government regulation.

Small businessess don’t have as many
people in their employ.
It is likely that the cost of
compliance with regulations does not
rise in proportion to the size of the
business, in which case big businesses have
an advantage. Their cost of compliance
with regulations will be a smaller portion
of their revenue (even if it is a larger
absolute amount). Small businesses
might find it harder to compete as the
regulations become complicated.

There is a phrase that is used for this:
“too small to comply”. (A related
phrase is the phrase “too big to fail,”
which also provides an advantage to big
firms — more on this later.)

In economics you have to watch out for
unintended consequences. In this case,
policies that try to restrain the power
of big business may actually enhance their
power by eliminating their smaller competitors.

New Yorker cartoon:

http://www.art.com/products/p15063454136-sa-i6847015/peter-c-vey-these-new-regulations-will-fundamentally-change-the-way-we-get-around-the%E2%80%A6-new-yorker-cartoon.htm
……………..
–Douglas Downing
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