What’s the connection between legal clarity and the economy?
One of the biggest risks in running a business is legal uncertainty. If a company misinterprets a regulation or fails to meet complex legal requirements, it can lead to lawsuits and fines. So how can policy changes that provide legal clarity have a positive impact on the economy? The Trump administration’s new passport policy provides an interesting example of this very question.
At the heart of the new passport policy: the male/female dichotomy
President Trump issued an executive order that recognizes only two genders on federal government documents: male and female. This removes non-binary gender designations such as “X” from federal documents, such as passport applications, and establishes clear criteria based on biological sex. While the policy is controversial, it has the potential to have positive economic effects in terms of legal clarity and administrative efficiency.
The economic benefits of legal clarity
- Reduced legal risk for companies
- The new policy provides businesses with clearer standards for interpreting and complying with gender-related regulations. For example, when employers address gender-related issues in their employee benefits or hiring policies, clear guidance can reduce unnecessary legal disputes.
- According to the American Bar Association, lawsuits and fines due to legal ambiguity can be costly to businesses, so clear regulations can reduce these costs and stabilize business operations.
- Simplify contract management and compliance
- Whether in business-to-business contracts or working with governments, clear gender definitions make contract creation and review simpler. This can speed up contract signing and increase trust between companies.
- Supporting small businesses
- Small businesses in particular often struggle to interpret and comply with complex regulations. The new policy will help them operate more efficiently, with fewer resources required for compliance.
Reduce administrative costs and improve efficiency
- Streamline document processing
- By removing additional gender options such as “X” from federal government documents, the process of creating and processing documents is simplified. This can lead to administrative cost savings.
- For example, the U.S. State Department processes millions of passport applications each year. Simplifying gender options reduces errors in data entry and verification, and speeds up processing time.
- Saves the government money.
- Increased administrative efficiency allows governments to do more with the same resources. This also has a positive impact on taxpayers, providing an opportunity to reduce costs while maintaining the quality of public services.
Effects in real-world examples
- Administrative Efficiency Case
- Canada introduced ‘X’ gender labeling in 2017, but the initial implementation incurred significant administrative costs due to database updates and system changes. In contrast, the Trump administration’s policy can be seen as an example of avoiding these additional costs.
- Reduced legal disputes
- In 2019, a large tech company spent approximately $5 million in legal fees due to lawsuits related to gender definitions. The new policy is expected to reduce the likelihood of such disputes, providing companies with substantial financial savings.
The LGBT community, which includes CEOs, professionals, and more, is no longer just a “minority” but is recognized as a group that has a significant impact on the economy and society.
However, their growth and influence has been put on hold by President Trump. While negative effects have been predicted and there are many concerns, on balance, Trump’s policies are likely to help reign in the LGBT community’s undue influence and restore traditional values.
