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.