Why Should the Government Not Run a Business? – 5 Negative Effects of Government Intervention

The debate over government business regulations and whether the government should have more control over and intervene in private business has been hotly contested for decades. 

As Businesses struggle with paying salaries during lifestyle inflation problems and maintaining a workable payroll with software such as Pay Stub Portal, some business owners wonder how much say a government should have in their company. 

Those in favour of government intervention in the market point to unfair working practices, inequality in the distribution of wealth, damage to the environment, and the increasing power of industry monopolies as reasons the government should intervene and correct negative company practices. 

However, on the other side are compelling arguments concerning the protection of a free market, the infringement on individual freedoms, and the slowing of technological and industry advancement. Below we will look at the Top 5 Reasons Why a Government Should Not Run a Business. 

1.   Career Politicians Do Not Have Business Experience. 

Politicians who have been working on their political careers since leaving college often have little real-world experience and will have sparse knowledge of the daily ins and outs of running a business. Critics of government intervention in the market ask if this puts them in the best place to make decisions about industry issues.

Although some politicians turned to the political world after enjoying substantial business success, others have been working on their own political rise their whole professional life. Their knowledge of markets, business strategy, and industry development will always be that of an outsider and seen through the eyes of a particular political bent. 

Politicians may be swayed by hot topics such as lifestyle inflation costs to impose unrealistic payroll demands on companies, with little long-term thinking about the effects in the long run. 

Business knowledge, industry understanding, and economic expertise take years of on-the-job experience to acquire. Whether reading government reports and being updated by advisors places politicians in the right position to make important business decisions is debatable. 

2.   Impact of Powerful Lobbies and Political Pressure Groups on Government Business Regulations. 

A non-governmental business should never be vulnerable to the whims and prejudices of pressure groups and powerful lobbies. Political parties often are. Governments may be willing to implement harmful business policies, funding, and incentives that negatively affect the free market and individual decision-making to appease groups that can hold considerable sway over voters. 

A political party may be happy to shape policies and regulations which place certain industries and businesses at a distinct and unfair disadvantage. And promote and subsidise sectors that are no longer practical business propositions on their own. 

In a free market, companies become obsolete when they no longer reflect the interests of the consumer. If a considerable percentage of the population condemns the practices of a company and votes with their dollar, the organisation will suffer. It is argued that this type of Financial Darwinism is sufficient to regulate the market without undue influence from lobbyists and pressure groups. 

3.   Government Intervention in the Market Based upon Short-Term Political Advantages

Politicians are often in the habit of engaging in short-term thinking in line with the fast-paced, chop and change nature of politics. This can result in pledges and policies which will benefit them in the press and eyes of the voters with little thought to the long-term consequences on industry, economy, and innovation.

Any sustainable business needs to look at the long term; short-term thinking just doesn’t cut it. Although the day-to-day success of the company is important, along with public perception and image, business owners also need to make sure they are setting themselves up with sustainable, profitable practices unhindered by unrealistic political thinking. 

Businesses are thinking about payroll, income costs, taxes, and salary amount way in advance. Using paystub generators they can plan well in advance for their outgoings and incomings and how much they can afford to pay on salaries. All of this can be disrupted by short-term, press-hungry political strategies. 

This contrast in thinking and approaches can result in policies that negatively impact businesses while giving a politician a temporary boost in public perception and political power. 

4.   Impacts of Government Business Regulations on Personal Decision Making and Freedoms

Every private citizen has the right and reasonable expectation that they should be able to make decisions for themselves. And this extends to their business practices. Many critics of government intervention in the market worry about where exactly the line is drawn and exactly how far the decisions about private organisations will go. 

Government business regulations may begin to infringe upon private citizens’ rights to free speech and freedom of religion and freedom of the press to appeal to certain voting factions. 

Suppose you are looking at your Pay Stub Portal and wondering how you are going to be able to maintain your current payroll obligations. You may be forgiven for feeling resentful of unnecessary and costly interventions in your organisation. 

It can also result in inequality in business taxes, with certain industries paying the penalties for being politically unfavourable. Critics argue that all of this may be the government overstepping. Advocates claim that as the government is ultimately responsible for protecting its citizens, certain industries deemed harmful to the public good should be penalised. 

5.   Slowing Industry Progress and Innovation

Government intervention in the market doesn’t just concern rules and restrictions. It can also include funding and bailing out industries facing financial crises and struggling in economic downturns. While this can be important in terms of supporting the jobs and living standards of the populace, critics argue that this type of coddling can lead to stagnation and unnatural longevity of companies that are not keeping up to date with modern market demands. 

Many point to the public sector and state-supported industries as prime examples of the negative effects of funding regardless of performance levels and profitability. In some state-subsidised industries, this can lead to the overproduction of goods that are just no longer in demand in the modern market. 

Many business owners are perfectly capable of maintaining fair work practices, salary offers, and calculating upcoming raises based on lifestyle inflation with software such as Pay Stub Calculator. Should responsible business owners be allowed to concentrate on their innovative business strategies safe in the knowledge their time and efforts won’t be hindered by government intervention?

Competition is one of the main incentives for innovative thinking and invention. Would this be curtailed if certain industries no longer had to worry about sustainability and offer the most inventive and cutting-edge options for their customers? 

Summary – Top 5 Negative Effects of Government Business Regulations

Government intervention in the market faces heavy criticism from free market advocates and those who argue that political meddling in industry harms innovation and curbs the right to freedom of speech, expression, and religion. Many argue that unnecessary rules and regulations from government officials can harm economic growth and industry innovation. 

Others question whether people who are inexperienced in the business world have enough knowledge and understanding of the long-term financial goals of businesses to fully grasp the market ramifications of the decisions they are making due to potentially short-term issues such as lifestyle inflation. 

As the market develops and industries pivot to meet the modern social expectations of customers, companies will need to self-correct if they are to continue to be financially viable organisations going forward. In this case, there will be less need for government business intervention. 

To make your business finance and payroll maintenance one less thing to worry about in the current climate, make sure to use a website such as Pay Stub Portal to save yourself time, effort and money in all your employee salary tracking and payments.