Editorial 54: The effects of regulatory uncertainty
Frequent travelers have the opportunity to compare different situations and different countries, almost simultaneously, so that the circumstantial factor of time disappears. It is as if they could see a picture of a changing object from several places at once without time spent in displacement, affects the state of the object.
When analyzing with them the major difficulties that affect the development of the various societies, there is almost unanimous coincidence: The legislative immobilism and regulatory uncertainty, although at opposite ends, produce the same effect. Both affect sectors, emerging or established, producing legal uncertainty that condemns businesses and eventually takes its toll on the country and its citizens.
All business development has its inherent difficulties arising from the financing, consumer acceptance, language, and logistics, among others. But with effort, advice and product quality is possible to start, expand and strengthen a business project anywhere in the world. But the difficulties become unsurpassable when labor regulations, fiscal, trade, customs or operating permits that apply, change suddenly or remains stationary beyond the limits of being obsolete.
In recent years we have had practical examples of regulatory uncertainty in such diverse sectors as energy, audiovisual and health:
(1) Maintaining an outdated legislation, without a period of updating or in breach of these periods, which prevents the introduction of new technologies.
(2) Governmental regulations that came into effect and are canceled, retrospectively by court judgments for not conforming to higher laws.
(3) The indiscriminate use of extensions of time previously agreed.
(4) Implementation of recommendations, not transposed into national law, as if it were their own regulations.
(5) Changes in legislation without allowing time for the sector can be ordered according to an earlier although recent legislation.
A government that cares about the welfare of its citizens must ensure that companies, source of income for most of its citizens have equal opportunities, stability of regulations or the implementation of new regulations, necessarily agreed between the Administration and administered for the common good and the rule win / win, are made in stages staggered so that companies can adapt.
That sounds like obvious, but it’s so obvious as to leave be obvious, and business and social reality is full of problems caused by any of the five causes of regulatory uncertainty. Political expertise is demonstrated getting the right balance between innovation and stability. The reverse shows a lack of maturity or authoritarianism and we have samples of both, on all continents without exception, from countries that were world leaders and have disappeared from the ranking or emerging countries that have suddenly ceased to be produced a long sequel, business failures and unemployment, which takes generations to recover.