Does the government over-regulate? Smoking, drinking, guns, car seat belts, bicy

Question

Does the government over-regulate? Smoking, drinking, guns, car seat belts, bicycle helmets, taxi licenses, liquor licenses, fishing licenses. Where is the logic? What is the economics? It's perfectly legal to pick up a woman at a bar and take her home to have sex, but if you offer to pay her, you've committed a crime. It's perfectly legal to volunteer your services to some business for free, but if they offer to pay you $5 an hour, they've committed a crime. You can donate a kidney to a perfect stranger, but if you accept money you've committed a crime. There are (presumably) positives that come out of these laws and regulations and (most likely) negatives, too, that impact, supply, demand, price, cost, social cost and more.

Your assignment is to think of one item and discuss both the logic and the economics of the regulation.

Explanation / Answer

Government regulates to take care of the interests of the different stakeholders of the economy. With the help of regulation, government tries to prevent the market failure problem. Besides, it brings free and fair competition, maximization of surplus or welfare and prevent monopolization as a part of economics. Further, the government does not over regulate, because the government does not discourage the creation and ownership of private property rights, or take the full control upon the resources using resources. It can be understood by few examples.
In a business of tobacco related products, if the government does not regulate, then there is a negative externality in the form of passive smoking and health hazards. It creates market failure. It forces the government to apply taxes, so that production comes down and people demand less. Besides, warning is also mentioned on the packaging. It discourages the buyer and market failure is resolved. It is only possible due to the government regulations. Besides, there different activities, that are allowed at a personal level, but it is not allowed as a trade. For example, the government allows to have consensual s-e-x in some countries. But, flesh trade is strictly prohibited. It is due to the scope of harassment, exploitation and trafficking. So, regulation helps in preventing the spread of social evil and crime. Hence, government finds it correct to regulate it.
So, it can be concluded that government does not over regulate as long as it does not acquire assets using regulations.

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