YANGON UNIVERSITY OF ECONOMICS

DEPARTMENT OF APPLIED ECONOMICS

MASTER OF PUBLIC ADMINISTRATION
BATCH-19
FIRST YEAR, FIRST SEMESTER

Government Regulation “Less is More”

Roll no. EMPA I-9

Name Khine Mon Swe
Module Code EMPA 113
Subject Public Administration
Lecturer Dr. Kyaw Min Tun
Submission Date 12 September 2022
 The Role of Government: Direct Involvement Versus Regulation

Summary
In this chapter, authors show the concepts and issues of the role of government, what and
how the government should do, a decision tree for government intervention and government
intervention. This chapter demonstrate that both the role of government and government
regulation might keep in an alliance to adjust the public administration imposed by the global
context and technological trends.

At first, the authors proved that two key justification for government action which remains
the concept of public goods and services. Theses justifications are important to recognize the
dynamic nature of the concepts of the characteristics of a public good or of a natural
monopoly in which suitable for the market mechanism as a result of technical or institutional
changes with two examples_ cost reductions through technological improvements and a
healthy global environment, international financial stability. In this situation, authors
mentioned the decisions on the role of government as “decision tree” for public
administration.

Government Regulation

In this context, a good enough reason for government intervention in a specific activity,
whether to choose direct government involvement of some sort, or indirect government
influence through regulation. A good regulatory system supports national economic activity,
development, and equity in many ways in which property rights and avoiding needless
litigation, fostering competition, correcting market failures, and promoting efficient and
equitable social and environmental policies. Though, excessive regulation, especially when
non-transparent and arbitrarily enforced, raises transaction costs for the economy as a whole
and generates a variety of risks, including corruption.

Then, regulation is a major activity of provincial and local governments as well. The
regulatory activity of subnational government is of two kinds: in an autonomous capacity
under the doctrine of “original powers”, or through the delegated administration of national
regulatory programs. Also, there are three broad categories of regulations_ economic
regulations, social regulations, and administrative regulations.
In addition to the disclosure by public agencies of their regulatory actions under information
laws, external checks are needed to ensure accountability. Besides, judicial review
challengers of the agency’s actions may seek criminal prosecution, money damages, or
injunctive relief.

For reconciling regulatory conflicts, first potential conflict is a “vertical” one, between
national regulations and the actions of decentralized government bodies. The second area is a
“horizontal” one, between national regulations and the objectives of specific central
government entities.

Under the point of special problems of government regulation in developing countries,

authors discussed_

(1) weak enforcement capacity in safety, health, land use, environment, and other public
interest regulations permits flagrant violations of key regulations, with especially damaging
impact on the poor.

(2) The absence of arm’s -length relation between the regulator and the operator restricts not
only competition but accountability.

(3) The volume of regulations in developing countries is their haphazardness and

inconsistency.

Aside from the risk of corrupting inherent in excessive and opaque regulation, the cost of
regulation has four main components_

 fiscal costs to government of administering the regulation

 administrative and paperwork costs for businesses and citizens
 costs of compliance; i.e., the cost of buying new equipment, reconfiguring production
processes, relocation, and cost escalation due to delays in receipt of permit
 indirect costs to the economy, in the form of reduced competition and innovation, and
lower investment.

Government regulation is indeed a case where typically “less is more”. However, the
effectiveness of enforcement is also a function of the quality and appropriateness of the rules
themselves. As a broad principle, an unrealistic or excessively cumbersome rule, which raises
the cost of compliance, also reduces the probability of compliance. Consequently, bad quality
regulations raise transaction costs for the economy as a whole and fail to satisfy the
legitimate purposes of government regulation to boot. As final thoughts, deregulation or
regulatory simplification have been undertaken in many countries for years. Regulations are
hardy weeds, however, partly because most of them serve specific interests and partly
because they generate the employment of regulators.

From Three to Four Es

Previously, the classic “three Es” of public administration are economy, efficiency, and
effectiveness. Economy refers to the acquisition of goods and services of a given quality at
lowest cost and on a timely basis. Efficiency subsumes economy, as it refers to production at
the lowest possible unit cost for a given quality. Effectiveness refers to the extent to which the
ultimate objectives of the activity are achieved. A fourth “E” must be added to the mix:
Equity. The most “efficient” system will not be sustainable, owing to the cumulative internal
tensions and to the withdrawal of that voluntary cooperation, which is the cement of good
governance.