The Economist finds “the land of the free” has become increasingly tied up by red-tape.
Americans love to laugh at ridiculous regulations. A Florida law requires vending-machine labels to urge the public to file a report if the label is not there. The Federal Railroad Administration insists that all trains must be painted with an â€œFâ€ at the front, so you can tell which end is which. Bureaucratic busybodies in Bethesda, Maryland, have shut down childrenâ€™s lemonade stands because the enterprising young moppets did not have trading licences. The list goes hilariously on.
But red tape in America is no laughing matter. The problem is not the rules that are self-evidently absurd. It is the ones that sound reasonable on their own but impose a huge burden collectively. America is meant to be the home of laissez-faire. Unlike Europeans, whose lives have long been circumscribed by meddling governments and diktats from Brussels, Americans are supposed to be free to choose, for better or for worse. Yet for some time America has been straying from this ideal.
Read the whole thing.
In 2005 (before things got even worse), the Small Business Administration of the Federal Government estimated that the cost of regulation to small businesses was $1.1 trillion or $7600 per employee in firms with 20 or fewer employees.
Let’s think about this for a moment. Say you want to expand your business. Hire ten more people. Let’s say that’s $400,000 in wages. Then there’s probably $60,000 in healthcare benefits (more once Obamacare gets fully implemented). And $50,000 in payroll taxes, workers comp, unemployment. And then $90,000 in regulatory compliance burden. And $40,000 in additional G&A to support those hires. This is starting to look really appetizing isn’t it? Makes you want to risk your capital, right?
But the Obama administration (that probably doesn’t have ten people in it who have ever personally faced this sort of decision) can’t understand why the economy isn’t growing faster. Maybe threatening even more regulatory and tax burden will do the trick.
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