Former GE General Counsel Comments on Regulation of Business – It’s Not so Simple
GE’s former General Counsel, Ben Heineman, Jr., is a widely respected lawyer who ran legal for the massive industrial and financial giant. In an interview with Corporate Counsel, he offered the following comments on "regulation" of business. His comments are well worth noting – the answers are NOT as simple as asserted by some on both sides. The key quote is:
CorpCounsel: We hear frequent complaints that businesses are subject to increasing regulations. What do you think about today’s regulatory framework? Are regulations bad for business?
Ben Heineman, Jr.: The descriptive answer is that businesses are facing more regulation everywhere in the world. There clearly has been a trend of re-regulation in the United States, after a period of de-regulation. That is obviously true in financial services, but there’s clearly increasing enforcement in the Foreign Corrupt Practices Act (FCPA) area, and strong environmental regulations, and so on.
But if you go to Europe, the E.U. is the master of regulations. We used to laugh and call it a regulatory superpower. If you’re in Europe, whether it’s privacy laws or competition laws or any number of subjects under pan-European jurisdiction, there’s going to be regulations there. And then as you go out into the world, even in a place like China there’s been a tremendous outpouring of law and regulation in the last 10 years. Chinese labor law in its current complex form, for example, did not exist 10 years ago. Really, wherever you go in the world, there is both increasing regulation and some form of enforcement. Places like China are especially difficult, because there’s lots of regulation but very episodic or erratic enforcement, and because the Communist Party still controls a system of rule of men, not rule of law.
Whether this is good or bad for business, you’d have to go subject matter by subject matter, and almost provision by provision. I believe deeply that regulations, number one, promote market efficiencies such as antitrust law and securities law—they basically deal with externalities that harm the social good if they’re not regulated to some degree. And regulation is necessary to create the fundamentals of societal security, order, education, and infrastructure. They come in different shapes and forms and they serve different purposes, but I don’t think there’s much question that over the last 100 years we’ve evolved to a mixed economy, where the government promotes market efficiency, social goods, and societal fundamentals.