The Purpose and Priority of Regulations
The dramatic power failures in Texas in recent weeks have highlighted their mostly unregulated energy market and in turn should cause us to assess the real purpose of regulations.
Regulations are Protections.
I spend a significant amount of time helping companies understand, achieve, and sustainable fulfill regulatory requirements and I endorse this shift of perspective.
I realize that regulations can be costly, challenging, and even stifle competition, however the absence of regulations often has more dramatic consequences which consumers have little power to combat or change. I used to be a strong free market advocate but years of consulting have taught me that regulatory laws (protections) are a necessity in critical sectors. The free market isn’t incentivized to protect consumers.
I wouldn’t bank with an organization that isn’t FDIC insured and therefore regulated. I wouldn’t get Healthcare from a provider that didn’t take HIPAA seriously. I very glad that I’m not in an unregulated Texas energy market.
This isn’t to say all regulations are good. There are poor and unreasonable regulations. However, I think that speaks to the importance of good government and strong feedback loops.
A wise friend added this excellent observation:
PS: This is what is happening with the state led privacy regulations in the US. It highlights the need for a unified Federal approach.