Doing business with the government is not quite like doing business with businesses. The creation of the Dodd-Frank Consumer Protection Act is supposed to make regulators the 'better of two evils' according to proponents. This is because this particular legislative act allows government entities such as the Consumer Protection Agency to "autonomously write rules for consumer protections..." and prevent a future financial crisis.
Image source: Kosta Kostov
To do business now requires businesses to deal with the government's regulatory sore thumb. No longer does the government want the kind of systemic failure that emerged with 2008's financial crisis. According to Geoff Colvin of CNN Money regulations such as ObamaCare are scary to corporations uncertain of what will be required of them. They fear doing business in accordance with the government's lead will involve higher taxes and future rules that will stifle business activity.
Regardless of whether it is business or government overseeing financial decisions, ultimately one or the other would be fallible. The difference is with government regulating business, failure is more bureaucratically thickened via a slow moving porridge of red tape whereas left to their own devices businesses are allowed to fail faster and more fluidly, but not necessarily with a whole lot of liquidity.
Businesses are thought to have responded to regulation by hoarding money in foresight of potentially high expenses that may come about with increased corporate taxes and regulation related costs. However, market observers such as Loren Steffy of the Houston Chronicle think there is more to it. Specifically, Steffy thinks businesses do not forecast a whole lot of revenue growth so do not want to use up their capital on unnecessary labor costs.
To do business now requires businesses to deal with the government's regulatory sore thumb. No longer does the government want the kind of systemic failure that emerged with 2008's financial crisis. According to Geoff Colvin of CNN Money regulations such as ObamaCare are scary to corporations uncertain of what will be required of them. They fear doing business in accordance with the government's lead will involve higher taxes and future rules that will stifle business activity.
Regardless of whether it is business or government overseeing financial decisions, ultimately one or the other would be fallible. The difference is with government regulating business, failure is more bureaucratically thickened via a slow moving porridge of red tape whereas left to their own devices businesses are allowed to fail faster and more fluidly, but not necessarily with a whole lot of liquidity.
Businesses are thought to have responded to regulation by hoarding money in foresight of potentially high expenses that may come about with increased corporate taxes and regulation related costs. However, market observers such as Loren Steffy of the Houston Chronicle think there is more to it. Specifically, Steffy thinks businesses do not forecast a whole lot of revenue growth so do not want to use up their capital on unnecessary labor costs.
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