By regulating markets, government can eliminate competition for the businesses it supports. For example, the current head of the FDA is a former Monsanto vice-president. Since he has good relations with the company, he will create regulations to hurt competitors and small businesses, and, in turn, help Monsanto. Such corruption often occurs in our government.
Many corporations hire lobbyists to lobby for stricter regulations and taxes because it eliminates the small business competition allowing them to monopolize resources and products. Large corporations can just leave America and escape the higher taxes while still maintaining price. Small businesses do not share these same luxuries.In the end is kills competition and leads to global monopolies
Regulators do many things to improve public welfare (and many of those things also benefit the economy): They ensure only high quality food is publicly sold, they work to prevent pollution of our air, soil and water and they help protect workers in dangerous professions. These benefits filter back into economic calculations primarily through the increased productivity of a healthy, stable workforce.
The real questions are: 1) Are the compliance costs of a given regulation greater than or less than its benefits to the public?
2) Do these compliance costs, taken in aggregate, form a significant barrier to market entry?
There are definitely some regulations that deserve to be modified or repealed. But many are absolutely crucial as well.