Blog Post 07/25 Regulation For/Against

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Business Issue with Competing Pressures

Automobile trade is an issue with competing pressure. The National Highway and Traffic Safety Administration creates regulations and then the US Customs and Border Protection ensures that all imported cars meet the US standard of fuel emissions, safety, and threat prevention which the NHTSA created. This creates a competing pressure because some car enthusiasts want cars that cannot be legally imported into the US, such as the 1990 BMW M3 Sport Evolution III. Car enthusiasts and people who want a specific car which the US regulates have to either deal with the fact that they cannot get that car or move to another country in order to legally own the car. This influences how automobile companies do business because if they are a foreign automobile company and they want to sell in the US, they have to make sure that their cars comply with US standards. This could end up raising the cost to manufacture the car because they have to include safety and fuel emission features to meet those standards.

Rationales For and Against Regulation

Government regulation is important in automobile trade because it makes sure that cars are not overly damaging to the environment. Making sure that cars meet a certain emission standard means that the only cars that will be on American roads are ones that don’t pollute as much as some other foreign cars. Additionally, the safety standards that the NHTSA creates and the US Customs and Border Protection puts on the cars helps to reduce the amount of car accidents due to unsafe features in cars. On the other hand, you could argue that the free market would help to address the issue because if the unsafe cars cause more accidents, less people will drive them, and manufacturers will stop producing them.

Other Examples Like This?

An example of this is with the government regulating alcohol from 1920-1933, during the Prohibition era. The government regulated alcohol to the extent that it banned the sale and consumption of alcohol. It ended very poorly, as criminal organizations took control over the alcohol supply, and eventually, was repealed. During this time, alcohol businesses turned to criminal organizations in order to sell their alcohol or lose their business. Although it was illegal, the government regulation made them operate under the table. It could be argued that a free market would have been better because people will get their hands on that alcohol anyways, whether from illegal operators or other outside means, so it’s better if companies are able to make a profit and invest back in the community.