August 07, 2012

Where's Rusty? Or, Why Barack Obama Hates the Small Businesswoman

My wife's new business property is finally up and running. I spent most of last four days trying to get the place cleaned up and ready for her to move in. She's in and thanks to her hard work and effort -- not government roads -- she not only has expanded her home based business but also hired three people to work for her.

Before today's rant, let me quote from my previous rant about Obama's philosophy of why business are started, succeed, or fail:It wasn’t the road that built my wife’s business. It was her hard work.

And the second mortgage we took out on our house in order to make the dream come true. Whether her business fails or succeeds the roads will still be there. If it fails, we lose our house. That’s called risk. We’re the ones taking it. But if it succeeds? Then we profit from it. That’s called reward.

We’re the ones taking the risk. We’re the ones that will reap the reward.

It’s a fundamental American value and something the current occupant of the White House doesn’t understand.I stand by those words, only it's worse than that. Much, much worse.

The regulatory burden on even a small business like my wife's is substantial. How substantial? At least one of my wife's employees was hired just to free up her time so that she could spend it doing required paper work for the government.

That's 1/3 of our labor costs devoted specifically to overcoming the regulatory burden.

But it's worse than that because in the last few months we've had to go through so many hurdles just to get the proper approvals from the proper bureaucrats. One of those bureaucratic agencies said "no" to one of our licensing applications, meaning our profit potential was cut in half.

And the reasoning behind rejecting that license application? There were too many similar businesses in the area. In other words, a government bureaucrat decided that our area didn't need another of the same businesses because that might jeopardize the profits of my wife's competitors.

Most liberals like to fool themselves into thinking that government agencies are set up to protect the consumer from monopolies and oligarchies. Instead, the reality is that many of these licensing agencies are set up to protect businesses from competition.

Of course, they don't ever say that this is their mission. They claim these licensing restrictions are a way of ensuring that a public need is met. Their reasoning is that some needed industries won't make needed capital investments if they aren't guaranteed a certain rate of return. Licensing restrictions restrict competition and make it harder for "much needed businesses" to go under.

In reality this means that previously established or politically connected businesses are given preference over start ups. The government, in the name of the public good, now restricts competition and stifles innovation.

Now, don't get me wrong, my wife's business will succeed with or without the additional licenses she sought. She's just that good. But our profit margin would have been at least double what it is now had the government not interfered in the free market all in the name of the public good.

But it gets even more ironical than that. About a month into trying to figure out all of the paperwork, I suggested that my wife get a hold of someone from the Small Business Administration. She did, and it was the SBA that helped my wife finalize much of what needed to be done in order to push through everything required.

You might be tempted to call me a hypocrite. The SBA is a federal entity. The SBA really helped. I'm not sure we could have made it through the process as quickly as we did (and it was still a three month process!) without them.

But the hypocrisy lies not with us, but with those who actually believe the government helps, not hinders, business.

While it's true that the SBA was helpful, why was their help necessary? Because of government regulations.

In other words, our government is so large and complex that it requires a separate government agency just to help regular folks understand how to navigate its complexities.

Think about that. Government is so big that without an army of lawyers at your disposal it requires yet another government agency just to explain it all to the layman.

We required help from the government in order to protect us from the government. It's win-win if you are in favor of bigger government! First you pile on so many regulations that your business is sure never to succeed, then you start yet another government agency in order to help you stay afloat from sinking under the weight of regulations from other government agencies.

It's maddening.

So, the next time someone tells you that without government there would be no roads simply point out that it's a straw man argument. No one is arguing that we shouldn't have roads.

Let me publicly declare that I like roads. I'm pro-road!

What I'm not in favor of is a government which micromanages risk in the name of "the public good". Which seeks "fairness" at the expense of liberty. And which shields the ignorant, stupid, or evil from the natural consequences of their actions.

By Rusty Shackleford, Ph.D. at 05:00 PM | Comments |