China makes the case for regulation

Not long ago I was part of a panel that included a top executive of a major Fortune 500 company. There was general agreement about the subject at hand until he started to deliver the standard pitch about how government regulations were killing American business.

The fact is, I don’t know anyone who defends unnecessary government regulation.

Lincoln had it right when he said that government should do only what people cannot do for themselves.

And there is no question that we ought to constantly monitor and reduce regulatory burdens that don’t serve a useful purpose. But it is really difficult to take the anti-regulation crowd seriously. It was, after all, the lack of regulation and oversight on Wall Street and in the housing industry that led to the meltdown of 2008 and the worst economic crisis since the Great Depression.

But I listened to my fellow panelist and even silently conceded that he had a point when he cited one specific example of regulatory overkill.

What stunned me was when he went on to say that what we needed to do as a country was to be more like China.


Yes, really. He had just returned from China and said it was much easier dealing with that government than with ours. His company was able to get quick approvals from the top and, without any red tape, get down to work.

He is right — and very, very wrong.

He is right that if a top government official in China says something is going to happen, it happens. But there is no appeal, no recourse. Nor would there be any recourse if that same official suddenly decided his company couldn’t do business in China.

He may be happy with how he is being treated now, but he also has to know that things could change overnight.

I have spent quite a bit of time in China and know one thing for sure: None of the reasons China is easy to deal with should be applied in a democratic United States.

How does non-regulation work in China? One example was the recent story about a toxic heavy metal spill into Longjiang River. Two companies had dumped cadmium, a poisonous component of batteries that causes kidney failure and bone damage, into the river. The spill was not reported for two weeks, while people continued to use the water for drinking and cooking.

Can you imagine what is being dumped in China’s rivers every day?

Another recent story concerned the summary destruction in Beijing of a historic house without any review or discussion. It occurred without notice during the Lunar New Year holiday when no one was watching. It is the rule rather than the exception in China — the government can move unilaterally to condemn land to make way for development, many times for family and friends.

What was especially ironic about this executive’s view of China is that the corporation he works for had once been the victim of China’s lack of regulation.
A number of years ago, the corporation had signed up the required Chinese partner for a joint venture that was to use American technology to build a plant.

The plant was built, but in short order the corporation learned that its Chinese partner had also built a number of other plants using the corporation’s technology. It became a major competitor and would not reimburse the American company for the use of the technology. The U.S. company received no help from Chinese regulators or the legal system. I wonder how his predecessors felt about the “ease of doing business in China.”

Need we list all the products that have been shipped to the U.S. from China without proper regulation? They include toys laced with lead, counterfeit pharmaceuticals, dangerous tires, plastic-filled milk, and faulty drywall.

Do we really want to live in a country where they cut back on regulations to prevent those kinds of products from being distributed? Do we really want to live through another BP oil spill, a spill that could have been prevented if regulators had done their jobs instead of being held back by political appointees who did not believe in regulation?

I don’t think so. Our debates ought to be about specific regulations and how necessary they are, not about government abandoning its regulatory function entirely.

And China?

Give me a break.

Originally published 19 Feb 2012 on