Claim: In order to help small businesses thrive, government should play a minimal role in private businessmatters.

Small businesses need many conditions in place in order to thrive: startup capital, a suitable location
and physical infrastructure, shrewd founders who can adapt to changing circumstances — and also, of
course, customers. While, in general, a government’s hands-off policy towards small business can help
small businesses by freeing owners from time-consuming and cumbersome regulations, it is also the case
that some government regulations are needed to protect the public from unscrupulous business owners.
This type of regulation not only helps the public, but helps small businesses thrive by increasing consumer
confidence in small businesses, as well as protecting ethical small businesses from unfair competition
from businesses that break the rules.
The United States has one of the highest rates of entrepreneurship in the developed world — much
higher than the rates in Western Europe. Why? In the U.S., virtually anyone can start a business. For about
$35, one can obtain a business license, and then you’re officially in businesses. Hiring the first employee
or two is also relatively simple, and some workers can be paid as contractors, which eliminates the need to
administer payroll taxes. In contrast, in Western European nations where you need employment papers
(and sometimes references) to even open a simple checking account, naturally, the regulations and
paperwork needed to start an enterprise can be daunting. Furthermore, laws intended to protect workers
mean that it is virtually impossible to fire anyone, which can be a real burden for a small business that
simply cannot survive with employees who are not up to the task. The lack of regulation in the U.S. is a
strong contributor to the burgeoning of small business in that country.
On the other hand, a pure laissez-faire policy would be disastrous for small business, as well as for
society. Should we allow small businesses to sell “health cures” that actually make people sick, or car
seats for babies that haven’t been through safety testing? Of course not — even if requiring safety testing
puts a burden on small business. The safety of the public is important, to be sure, but public confidence is
also important if small businesses are to have any customers. Furthermore, some small business owners
(just like large business owners) practice racial discrimination, sexual harassment, and other abuses of
workers, such as paying undocumented workers less than minimum wage. It is important for human rights
to curtail these abuses; it also helps small businesses for the government to put a check on such practices,
because then legitimate, ethically-run businesses can compete on a fair playing field.
While this essay propounds a system of minimal to moderate regulation of small businesses, somemight argue that government has no right to intrude on the private dealings of businesses and their
customers. According to this view, if someone wants to offer unlicensed cosmetic injections, and budget-
minded consumers are willing to have their wrinkles filled with who-knows-what, then it is the right of
both parties to transact as they wish. However, in developed nations, governments take on, at very least, the
provision of services that individuals cannot provide for themselves — military defense, the creation of
highways and other infrastructure, and the testing of food and medicine on a wide scale, among others.
Individuals do not have the ability to test every can of baby food for botulism or to evaluate the credentials
of a “doctor.” Thus, in industries in which human health and safety are at issue, some regulation is justified.
How should governments best help small businesses thrive? In some sense, the answer is that
governments should back off and let people do as they will. In a free market, many small businesses will be
launched, many will fail, and the best will survive. However, some government intervention is required to
protect the public from dangerous products and harmful business practices. These regulations ultimately
help small business as a whole by encouraging consumer confidence in these businesses.