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  • From: Lawrence London <lfljvenaura@gmail.com>
  • To: permaculture <permaculture@lists.ibiblio.org>, marketfarming <marketfarming@lists.ibiblio.org>
  • Subject: [permaculture] Many Regulations Stifle Entrepreneurs and Small Businesses - US News (Attn: market farmers & permaculture entrepreneurs)
  • Date: Tue, 13 May 2014 22:58:47 -0400

(Attn: market farmers & permaculture entrepreneurs)

Many Regulations Stifle Entrepreneurs and Small Businesses - US News
http://www.usnews.com/opinion/economic-intelligence/2014/05/12/many-regulations-stifle-entrepreneurs-and-small-businesses
Consumers Are the Best Regulators Many regulations prevent aspiring
entrepreneurs from starting a business.

Even a mini-microbrewery couldn't stand up to the government's out-of-whack
regulations.
By Antony Davies <http://www.usnews.com/topics/author/antony_davies> May
12, 2014 2 Comments SHARE

My wife makes beer. Very good beer. Years ago, we talked about starting
what we called a “picobrewery” – something smaller than a microbrewery,
like a hobby with a positive cash flow. We figured that for a few thousand
dollars, we could create a small business that would provide part-time
employment for several people, generate a unique product, and maybe one day
would grow into something more substantial.

What we didn’t count on was regulation. No one was more concerned about our
customers than us – not just because we’d be financially liable if our
product harmed someone, but also out of a human concern. Our customers were
also our neighbors and friends. Yet here was the government telling us,
through rules written by people who had never brewed beer, what to do to
protect customers whom those people had never met and for whom they held no
responsibility.

When we discovered that complying with regulations would triple our startup
costs while providing no significant benefit to anyone other than people
paid to serve as government inspectors, we gave up our dream. Maybe our
little business would have grown into something large that employed many
people. Maybe not. The point is that we’ll never know because we never got
the chance to take a chance.

[ *GALLERY*: Cartoons on the
Economy<http://www.usnews.com/cartoons/economy-cartoons>]


Multiply our experience by hundreds of thousands and you start to get a
picture of the dark side of government regulation. Politicians tell us that
regulations exist to protect consumers and the environment. Some
regulations do. We certainly don’t want companies throwing their trash in
our rivers or belching toxins into our air. But many more offer few, if
any, benefits while imposing quite substantial costs on the economy.

Regulatory agencies don’t add rules simply for the sake of burdening the
private sector. However, regulations often have the effect of protecting
large corporations from competition or of helping to justify the existence
of the regulatory bodies creating and enforcing the rules. At the state
level, government regulation has become so lucrative for crony-capitalists
that today almost 40 percent of U.S. jobs require a government
license<http://www.hhh.umn.edu/people/mkleiner/pdf/Final.occ.licensing.JOLE.pdf>versus
about 5 percent a generation ago.
Louisiana<http://www.ij.org/freeing-louisiana-florists-licensing-law-is-blooming-nonsense>requires
$2,000 plus 80 hours of study to become a florist, while
Utah <https://www.ij.org/utah-hairbraiding-background> requires hair
braiders to get a beautician license that costs $18,000 and 2,000 hours of
study.

It would be bad enough if regulations only lined the pockets of
crony-capitalists. But regulations also sap our productivity. In a recent
study for the Mercatus
Center<http://mercatus.org/sites/default/files/Davies_Regulation&Productivity_v1.pdf>,
I compared the magnitude of federal regulations to productivity across 51
industries over the past 14 years. The statistics are alarming.
Productivity among the least regulated industries is almost double that of
the most regulated industries. Over the 14 years, the most regulated
industries saw their unit labor costs rise by 20 percent versus a decline
of 4 percent for the least regulated industries. Lower productivity means
higher prices for consumers. Higher unit labor costs means increased
unemployment as firms replace workers with machinery.

[ *SEE*: Cartoons on the Democratic
Party<http://www.usnews.com/cartoons/democrat-cartoons>]


The sobering reality is that there is no such thing as an unregulated
market. All markets are regulated. The question is whether they are
regulated by the government or regulated by consumers. Consumers are the
better choice because they know, better than government, what they do and
do not want. And they can punish, better than government, firms that don’t
give them what they want.

The only reason people would buy our picobrewery’s beer is because they
liked it better than they liked keeping their dollars in their pockets. The
minute our beer no longer satisfied consumers, they would regulate us out
of existence by spending their money elsewhere. This would shut us down
more quickly than any government regulator possibly could. In 2012, we all
saw the iron fist of consumer regulation fall squarely on Rush Limbaugh’s
radio show. Within hours of Limbaugh accusing Georgetown student Sandra
Fluke of being a woman of questionable character, nine advertisers dropped
Limbaugh’s show. The advertisers had done nothing wrong, but they feared
consumers’ wrath so much that they refused to be associated with someone
they believed their consumers would see as misogynistic.
That’s the power of regulation by consumers. It is stronger than government
regulation and, more importantly, it targets the right things for the right
reasons. Consumer regulation is controlled by people who are directly
affected making choices for themselves. Government regulations, on the
other hand, target the preferences of policymakers and special interests.
That leaves us with hundreds of thousands of rules that raise costs for
businesses and consumers and often provide little benefit in return. And as
my wife and I and countless would-have-been entrepreneurs discovered,
government regulation is often the reason we have fewer jobs than we need.




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