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What are the disadvantages of administrative agencies and regulations?
While administrative agencies provide the above-stated benefits, there are numerous disadvantages to relying on the agencies in the rule-making and adjudicative process. Foremost among the disadvantages, administrative agencies are famous for adding a degree of bureaucracy to regulated activities. Basically, there are added procedures, such as regulatory filings, inspections, continued record keeping and reporting, etc. Complying with additional regulations and the procedures raises the cost of doing business. These higher costs are born by the government, businesses, and consumers. Further, complying with regulatory burdens can slow process; and, in business, time is often as valuable as money.
Discussion: Can you think of any examples of private action (business activity) where administrative regulations add considerable burdens to the process?
- One example is the power generation business. Companies that use coal to create electricity are required to employ extensive measure to reduce carbon dioxide emissions. Companies that employ nuclear material to produce electricity are subject to extensive safety and waste disposal regulations. While these regulations serve to protect the environment of the public, it makes operation of the business far more expensive.
Prado, Mariana Mota, The Challenges and Risks of Creating Independent Regulatory Agencies: A Cautionary Tale from Brazil. Vanderbilt Journal of Transnational Law, Vol. 41, No. 2, 2008. Available at SSRN: https://ssrn.com/abstract=983807