Economists teach that business regulations have tax-like effects: higher prices and reduced output. Yet, politicians treat regulations as if they were free.

I got a taste of this in talking to the fellow next to me on the flight home from Hong Kong last week. He works for Brunswick's marine division (they make boat motors as well as bowling balls and cue sticks) and he was coming to a week-long seminar on how to comply with the Sarbanes-Oxley law. He was complaining that his small division has few managers, each wearing multiple hats, and that they were having great trouble complying with all the new rules.

If you want to learn more about the law, Professor Bainbridge has a post about Sarbanes-Oxley.

UPDATE: This was e-mailed to me by a friend.

I just popped out to your blog and wanted to add a few comments on Sarbanes Oxley. I can only echo the comments of the person you met on the Hong Kong flight. This law has created a whole new level of auditors, accountants, and second-guessers within our company. Most of the things these inquisitors implement or suggest seem to have little to do with good business, ethical compliance, or preventing another Enron. When asked to explain why we are doing something new, we are told “because of Sarbanes Oxley” as if that explains a good business reason for the change. So far, the only outcomes I see from the law are that legislators can feel good about “doing something” and businesses are burdened with yet another layer of expensive regulations.