Real business is hard work

Here's a very interesting observation put out by the great writer and very observant economic and social commentator Charles Hughes Smith.

Productive and Unproductive Capital
Honestly, it's much easier to sit at a desk at home and gather long-term capital gains (which may or may not be productively invested) or tax-free earnings than put up with the guff of real business. And if this is the case, then who's going to risk everything to hire people and "get America working again"?

This is why I predict 30 million formal jobs will be lost in this Depression; it's no longer worth it in terms of risk/return to start businesses when everyone is sucking real businesses dry and leaving rentier capital lightly taxed and lightly regulated.

The above is the summary of an essay which points out that over time we've structured our economy and society such that non-productive capital (passive bond and financial investments) are treated with kid gloves by our rules sets and tax codes while using the same capital to run a real business exposes one to all sorts of headaches and additional taxes that do not apply to "rentier capital".

So why bother?

I can tell you from my experience, this rings true. The amount of paperwork and forms and rules and taxes that my state of Massachusetts applies to my simple business are extraordinary compared to squaring up my investment and trading accounts at the end of the year.

Some of the rules are baffling and maddening as if designed to be cruel and arbitrary.

But they merely reflect the fact that over the past few decades we have made the decision to lighten up the rules and taxes on invested capital and piled on new incremental rules and taxes each year to working capital.

And this is why I think the Big Three dropped the ball when they went to DC recently. I know they were in begging mode, but if I were them I would have been sorely tempted, in response to some mean-spirited probing by Barney Frank, to have taken off my shoe and banged on the table while shouting "Stop! Enough!"

Then I would have proceeded to let the rule makers know that it is not my workers that are uncompetitive, it is the nightmarish combination of US rule sets and free trade that have killed the country.

You can have one or the other but not both.

An example would be the Americans with Disabilities Act (ADA). It's most recent incarnation released earlier this year is over 1,000 pages of tightly packed rules. I am making no claim as to whether this is a good law or a bad law, but pointing out that it represents a thousand pages out of tens of thousands that US corporations have to follow for which many other countries have no equivalent set of regulations.

As a society we've decided that such rules are important to us and, again, I am making no statement about whether this is a good thing or bad thing. For now, let's just agree that they are a fact of life.

But how does one compete with countries that do not have such rules in place?

Imagine that you are a home builder and you have to follow the Massachusetts state code books which run several thousand pages and you have to obey all the labor laws. Now imagine that the builder on the next lot over doesn't have to follow any of those rules and that the two of you are competing on price. Now imagine that a Massachusetts state representative publicly scolds you for being uncompetitive.

So the opportunity lost by the Big Three was their chance to turn the tables and say, "Mr. Frank, and other distinguished individuals, when you say my workers and my business are uncompetitive what you are really saying is that our regulatory structure is 40% too large. Since you hold this view I demand to know your immediate plans for reducing the size of government to a point where we can again compete on the world stage. My laid off workers will wait in your home district for your answer."

It's pretty simple, do we want free trade or do we want tens of thousands of pages of applicable business laws? That's the choice. We can't have both.

So if you have been wondering why the credit bubble burst and why US wages have been stagnant and why US industry has been declining, look no further than our goofy insistence on playing on a tilted field. The once great and productive middle class has been hollowed out by an ill-considered globalization fad that has made us worse off, not better off.

The solution is simple.

Either apply import duties that square up imported goods against the costs US businesses face for complying with our laws, or begin dismantling laws.

If we do neither, then we'll merely slide down the same slope we are already on and more and more businesses will come to conclusion that it's just not worth the effort, the risk, or the time.

This is a companion discussion topic for the original entry at https://peakprosperity.com/real-business-is-hard-work-2/

>>"As a society we’ve decided that such rules are important to us and,
again, I am making no statement about whether this is a good thing or
bad thing. For now, let’s just agree that they are a fact of life."

Chris,

While I am sympathetic in the main to the points you raise, let me give you a couple of examples of how we got here:

  1. Many years ago I worked for a guy who started his own business and delighted in having few rules and regulations for his employees. By the time I joined his company, he had begun to create a company manual of rules/regs because previous employees had taken advantage of his relaxed approach. Had all of his employees been honest, hardworking, non-abusive of his kindness, I have no doubt he would never have had to create the rules/regs. He was very dismayed that he had to do so, but it was the only way he could protect himself.

  2. I’ve also worked for companies where the employer is the bad guy (as I’m sure have many in this community) and rules/regs have had to be imposed by government entities to crack down on employer abuses. Conversely, I’ve also worked for companies where the union has taken advantage in a negative way.

Bottom line, there will always be a need for rules/regs that companies have to follow. Without them, too many companies would run rampant and would be untrustworthy and unreliable. Sometimes citizens will not find out until something awful happens - the school collapses in the China earthquake earlier this year is a prime example. I bet they built those schools on the cheap because government rules/regs were relaxed or virtually non-existent. Now the Chinese government is going to impose stricter rules/regs making the job more expensive for the companies involved. If the companies that built the schools that collapsed (killing thousands of innocent children) had done an honest, decent job in the first place, the rules/regs soon to be imposed would not be necessary.

So, you see, the government is not always the bad guy as implied in your post. Sad, but true. Frown

Sam…

[Additional Thoughts]

Many of the rules/regs imposed by government authority ensure that our food supply is safe, that our houses are properly built, and that the medicine you buy works as promised. Being in the medical device industry and having to ensure companies follow FDA rules gives me an insiders appreciation of the need for such rules and regulations.

People have died because companies didn’t follow the FDA guidelines which state that, at a minimum, products must be safe and effective to obtain FDA approval. Would you want to gamble with Becca’s life by purchasing non-FDA approved medications? Would you want a doctor to used non-FDA approved medical devices to treat her if it became necessary? Of course not.

Although rules/regs can be burdensome, I’d rather have them than not because I’ve seen what can happen without them.

Sam…

 

 

You cannot take the auto industry as representative. Look at Intel,
Apple, Microsoft etc. They are all well run and very competitive - the
rules are a minor hindrance. The US auto industry is simply not
competitive and they need to go the way of the dinosaur! If you abolish
too many of these rules, you might risk something like the finance
meltdown or China’s milk scandal.

My immediate reaction to the write up was to treat capital gains and bond income as ordinary income.

 

This is a great post on an important topic. Like so many of the subjects that come up here it all brings me back to my angst filled college era days of early 2000s. Back to my old Adbusters subscriptions, back to the anti-globalization movement, back to Quebec City breathing in tear gas in protest of the Free Trade Agreement of the Americas (FTAA). And once again it all comes back to Full Cost Accounting.

A major part of the demise of capitalism is free trade / globalization. Not free trade/globalization per say but the way free trade was completely geared to benefit only the multinational corporations that lead the whole thing in the first place.

[quote]It’s pretty simple, do we want free trade or do we want tens of
thousands of pages of applicable business laws? That’s the choice. We
can’t have both.

So if you have been wondering why the credit bubble burst and why US
wages have been stagnant and why US industry has been declining, look
no further than our goofy insistence on playing on a tilted field. The
once great and productive middle class has been hollowed out by an
ill-considered globalization fad that has made us worse off, not better
off.

The solution is simple.

Either apply import duties that square up imported goods against the
costs US businesses face for complying with our laws, or begin
dismantling laws.[/quote]

Very well put but I would have to disagree and say that I think we can have (could have had) both but it would involve a few other simple dimensions to the simple solution.

I would never want to give up all the rules and regulations, as complicated as they can be, that have protected social and environmental rights. If anything that is the product that should be exported first and foremost.

I would add that in order to do free trade, foreign companies must adhere to the same rules and standards that host countries companies do in order for that host country to be able to compete. If they can’t compete with the standards we’ve worked so hard to acheive then they have to pay the price to do business here (in the form of duty). This should have been a matter of national pride.

Why should a country allow their people to be undersold?

I know that we all know the answers to that…

so we can send manufacturing jobs that were once the lifeblood of North-America to where the near non-existence of labour laws and civil rights can get us dirt cheap labour…
so we can pillage the earth where we won’t see or feel or smell the devastation we’ve laid upon it…
And we all either bought into it so we can rake in the profits (take a deep look at your portfolio) or we bought it under the guise of cheaper products (take a look at where you’ve been shopping)
…but the price we’ve paid is now obvious and we are all accountable.

Sam,

A couple of points that ring true for me as regards this post …

Productive and Unproductive Capital
Honestly, it’s much easier to sit at a desk at home and gather
long-term capital gains (which may or may not be productively invested)
or tax-free earnings than put up with the guff of real business. And if
this is the case, then who’s going to risk everything to hire people
and "get America working again"?

This is why I predict 30 million formal jobs will be lost
in this Depression; it’s no longer worth it in terms of risk/return to
start businesses when everyone is sucking real businesses dry and
leaving rentier capital lightly taxed and lightly regulated.

As a businessman myself I consider the time and energy that I spend being the policeman for the government as a very unproductive use of capital.

We have to monitor and collect the payroll of each employee and account for all of the employees money that the government collects for disability, unemployment, social security and income taxes and then deposit it with the government via a bank plus we have to contribute our share of matching funds for some of those items as well. This process involves a lot of time doing bookkeeping and managing.

We also maintain mandatory health coverage for each employee as mandated by the state in the form of Workers Compensation Insurance. This also has to be collected, tabulated and deposited on a regular basis.

There are many more fees, bonds, insurances and so on that are also mandated by government and after all of that we also get to take the risk of trying to hire, train, manage and provide for continuous work flow and make sure there is enough cash on hand to make payroll. After that we can spend time actually running a business and focusing on the quantity and quality of the product we are selling.

Compare all of that with the option of investing the same money and reading a book while checking on the rate of return every few days. The point is that putting up with the guff of real business is not all that attractive thus the resultant problem of getting America working again.

Coop

What stands out for me about this is the comment about how much easier it is to make money through speculation than it is by working for it. Seems to me it’s been that way for a long, long time, and not just here in the US. But that is a system that rewards non-productive activity and punishes productive activity.

That’s why today we have almost no manufacturing capacity, no savings, more debt than any other country in the world, and a financial industry that is worth 22% of the economy instead of 4% or 5%. The Wall Street crooks get bail outs and golden parachutes and the rest of us get to work to support their excess.

And people are surprised this isn’t working?

[quote=srlinder] Bottom line, there will always be a need for rules/regs that companies
have to follow. Without them, too many companies would run rampant and
would be untrustworthy and unreliable. [/quote]

I agree completely. However the manner in which those rules are effectuated has a great effect on how cumbersome they are.

First of all, some rules are simply silly, and are enormously expensive to comply with compared with the relatively small benefit that they provide.

Second, some rules are commonsense, and should be on the books, but instead of merely being on the books they are attached to complex and unnecessary permitting procedures which make compliance unnecessarily expensive. Here’s an example of how a simple rule could become a ball-and-chain:

Scenario 1: Fire exits must be kept clear. Obstructing any fire exit is a crime. If a business wishes to fit any fire exit with a delayed-unlocking device (i.e., door opens in 30 sec.), it must be safe in the opinion of the fire marshal. (This is how it is now).

Scenario 2: If you wish to fit a delayed unlocking device to an exit door, you must obtain a Delayed Unlocking Device Permit from the Bureau of Bureaucratic Inefficiency ($500). You must submit a complete set of blueprints showing the location of each fire exit, and the certified results of a human traffic flow study conducted by a licensed traffic-flow engineer ($5,000). You must renew your permit annually ($250), and have a re-inspection done once every five years at your expense ($2,000) to insure that conditions in your building have not changed.

The problem is, largely, the existence of specialized regulatory bodies, and private code-making organizations (such as the National Fire Protection Association) whose existence depends on them continuing to think up more regulations.

Take such a thing as fire protection. Well, the fact is that we’ve pretty much got it covered. In general, we have a clear idea of how best to protect a building from fire using current technology. And a fire protection code which was published in 1985 is probably almost as good as one published today. But you have an enormous rule-making and safety equipment industry (it’s not just government), composed of people whose careers consist of thinking up new regulations. If they stopped, they would be out of a job. And so the rules get sillier and sillier. Here’s an excellent example: If you own a commercial establishment, you must have fire extinguishers. Now, once per month, most state fire codes say that somebody needs to check to make sure that each fire extinguisher is (a) in place and (b) pressurized. Makes sense. Now, common sense will tell you that anybody who is not blind is capable of reading the pressure gauge on a fire extinguisher to see whether it is charged. However, not too long ago it was decided by the National Fire Protection Association (a private organization which makes suggestions on new fire rules, which are usually followed) that the only people capable of reading the pressure gauge on an extinguisher each month are people who have been trained and certified in testing, assembling and servicing fire extinguishers. It doesn’t matter that you’ll never assemble a fire extinguisher as long as you live. In order to read the little gauges on your fire extinguisher, you need to go through this very expensive training (which of course requires annual recertification). Or else hire someone who has—at significant expense—to read the little pressure gauge on your fire extinguisher for you.

I could go on all day. The regulations are chock full of such idiocies as this, which have accumulated over time to make such things as renovation or expansion of a commercial building almost too expensive to contemplate. This mass of silly rules and permits and fees and hidden regulatory costs gets bigger and bigger, until the amount of capital required to start a new business becomes prohibitive.

 

"Any tax is a discouragement, and therefore a regulation so far as it goes." - Oliver Wendell Holmes, Jr.

Coop,

I agree it’s unproductive use of your capital, but the government needs you to be a policeman to ensure its rules/regs are being adhered to. An alternative would be to have a government agent sitting in your office 24/7 looking over your shoulder and I know you wouldn’t want that!

 

Employees are entitled in our society to "disability, unemployment, social security" and "health coverage for each employee as
mandated by the state in the form of Workers Compensation Insurance". Taxes and fees are needed to pay for all of these benefits. These must be considered part of the cost of doing business.

Otherwise, businesses may revert to the "old way" of doing things which is that employees work under what ever conditions you impose, then you can dispense with them like so much used goods when you’ve worn them out. Not really fair if you’re a hard working employee. Not really good for your business if you can’t find employee’s because you’re known for treating your staff like dirt. Wasn’t so long ago that this was reality for the average working stiff - hence the rise of unions.

 

Strangely enough, in spite of your comment, new businesses are started all the time. It’s part of the American dream to start with almost nothing and create a company and become financially secure (hopefully). In fact, having money to invest and reading a book may not be an option until such time as you have first created a successful business. How often have you read about people who start their business using family loans and credit card debt?

Thus, in spite of the onerous burden created by governments, starting and running a business is still the dream of many. If the government burden was that severe, no one would start a business in the first place!

Sam…

 

 

 

jrf29,

I had to laugh when I read your post because you are so right on! Laughing

Idiotic regulations that exceed the bounds of common sense are the bane of all societies - certainly we have too many here in the U.S.

Unfortunately, we have a system that is often devoid of common sense. What starts out as a reasonable requirement soon becomes an unreasonable burdensome one. Sometimes I think that government employees are lobotomized, when they reach a certain grade level, to ensure that their common sense genes are removed.

One of my favorite things to do when I hear someone make eminent sense about something is to say, "Careful, you’re in danger of being logical!" Surprised

 

And so, jrf29, I have just said it to you!

 

Sam…

From the above comments, itseems painfully obvious that any attempt to revive an America which will soon be "on the mat" from decades of consumerism, bureaucracy and government growth, particularly in a storm of economic recession/depression, to a course of true productivity, is dead in the water.

Over the last 300 years, (Europe, and over the last 150, America) much of western society, has become used to living with the "fat on the hog" of business bureaucracy - by virtue of the combination of early and extended colonialism, with the deceptive practices of fractional-reserve banking and finance.

England had perfected this scheme, to the point where nearly 1/2 of all employees in the "City" of London are finance-based (or were…). Little surprise that the engine of productivity and ingenuity which was the same Britian of the 18th and 19th centuries, has become but a socialist and government-dependent shell of former self.

This has allowed for a mindless tolerance of a parasitic regulatory segment of our economies, all of which are supported only by virtue (!?) of income confiscation through taxes.

Interestingly, in America, the original Federal Register was born from the Federal Register Act, in 1937, during the depression-era Roosevelt regime, in an effort to document the extreme growth of federal regulatory agencies, with the employees of those agencies hired in-part, as a "make work" program.

It sure did sink in!

It’s first edition, at around 16 pages, has now grown to over 80,000!!! This includes agencies to monitor important business activities, like the one which monitors the growth marketing programs for avocado growwers in Florida (!) Other are required to consider the proper plastic wrap on commemorative coins.

Surely this is money well taken, and part of a very necessary regulatory environment, "to keep us safe".

For instance, 18 U.S.C. 1821, insures a more risk-free America, by regulating and possibly penalizing persons for up to one year in prison, for taking their grandmother’s false teeth to another state without the authorization of a local dentist.

Likewise, under Title 7 of the U.S. Code, Section 953, any "warehouseman, broker, cleaner, sheller, dealer, growers’ cooperative association, salter, crusher, or manufaturer of peanut products" who refuses to file reports "on the quantity of peanuts and peanut oil received, processed, shipped, and owned by him" can be hit with a year in jail!

So why engage in the risks of actual business, with all of the attendend costs and burdens of "regulatory compliance". Why not just convince the rest of the world, to engage in productive effort (like China), and allow the western nations to live off the usury, so we can afford a safety-bubble of planetary proportions.

Through our pyramiding of fractional-reserve finance, we can always keep our endless armies of regulatory agents employed in "policeing" of actual productive enterprises here at home.

In the coming depression, it is clear that the only work available, will be "make-work".

This is part and parcel of the serfdom which we have come to accept under the corporate fascism which is taking strong root in America.

The President-elect has proposed a program whereby ALL Americans of entry-work age, could best serve the bureaucracy, government and corporate masters, through a program of compulsory and conscriptive "serf-labor", surely not by engaging in the risk of enterprise, but rather, to be embedded in a Soviet-style army of regulatory bureaucracy.

This is not by accident of course, it is a result of a culture which no longer can accept business risk of any type, and one which finds the majority of it’s populus unable to envision a productive life.

Thanks should be given to the union of bankers and politicians, between the Federal Reserve, and our Congress and Executive branch.

Are we not doomed?

Can America be productive, or do we need to impose a swath of tarrifs and penalties of the products of other nations?

http://www.youtube.com/watch?v=zO9EgeJpA40

 

If it weren’t for the 1000-pages laws the big three carmakers would have gone out of business long time ago!

Imagine that you were to start your own car business: building the cars is the easiest part. Getting all the approvals to be allowed to sell them and use them on the road is what kills your business. The small onces can not afford it, but the big ones can dedicate a whole department to all that bureaucracy. For them it is a small cost compared to the benefit of avoidig new competitors.

This is a constant pattern in many sectors: where I live a lot of small farmers had to stop or sell out to large corporations, not because they where not productive enough, but because they could not keep up with all the investments and paperwork required by environmental laws. The result: in the end those laws did little to protect the environment, but they where a big help for the large agricultural corporations who lobbied hard to extend the law with hundreds of extra rules and exceptions.

 

 

I was thinking about this topic lately as some friends of mine who started a business this year expect that they will go out of business next year solely because of a new Federal Law. The proposed regulations are out now and they will have some serious consequences for every small business that makes or sells toys or items that children might be attractedt to. On the surface it may seem like a good idea after all the problems with "Chinese" toys.

The new law requires "certification of
compliance based on mandatory testing." Now, if you want to make simple wooden toys in your home workshop you will have to spend thousands of dollars on safety testing for each toy design. It will simply not be economically worth it for any small producers to comply or anyone (like some of the 5 million newly unemployed Americans) contemplating starting a small traditional toy manufacture business to even begin. The new law also applies to any alteration of an existing product. So if you buy childrens’ clothes from a large manufacturer who has gotten the mandatory testing done and want to put a design on them you are out of luck unless you are going to pay for retesting. This law applies to any children’s products whether for sale or for free. The new regs go into effect in May. At that time you can’t sell or give away anything that has not passed the new safety tests. So if you are planning on knitting hats for your grandchildren do it soon.

On the positive side, there will soon be jobs for toy safety testers.

My friends’ business specializes in items from small producers and high quality European traditional toy makers. They have already been told by some of the European suppliers that they are going to stop distributing to the US because they can’t afford to follow this law given the small runs of items they make. Imagine having to spend $2,000-$4,000 dollars on testing each toy design and having to dedicate the time to making sure the paperwork is filed in all the right places. Needless to say my friends expect that their business model is over, and therefore their business.

 

Bush signs toy safety regulations into law

By Staff -- Playthings, 8/14/2008 9:53:00 AM

NEW YORK—The Toy Industry Association today applauded the signing into law of The Consumer Products Safety Improvement Act of 2008 by President George W. Bush. Described as the “most sweeping toy safety legislation in decades,” the Act is expected to significantly strengthen and make uniform the safety standards for toys and other children’s products sold in the United States. It also increases consumer product safety oversight by the U.S. Consumer Product Safety Commission. According to TIA, U.S. toy manufacturers and major retailers are already moving to conform to the new standards, which require certification of compliance based on mandatory testing. As part of that effort, TIA is developing a “comprehensive” Toy Safety Certification Program in conjunction with the American National Standards Institute to help toy companies meet the requirements.

Here is the link for the rest of the story.

http://www.playthings.com/article/CA6587519.html

 

[quote=Chris Kresser]What stands out for me about this is the comment about how much easier it is to make money through speculation than it is by working for it. Seems to me it’s been that way for a long, long time, and not just here in the US. But that is a system that rewards non-productive activity and punishes productive activity.
[/quote]
Surely not just in the US. In the European Union and Belgium, where I live, it’s problably even worse!
http://workforall.net/index.html
The system also rewards big companies and punishes small companies because the cost of all that buraucracy is proprotionally higher for small companies. The very same for subsidies, only a big companies can afford to waste the time to fill so complex forms.
But IMO fiscal competition is as important if not more. Why the hell do we still allow fake trade with offshore companies, and bank account in fiscal paradizes? To get more Enron scandals?

Research small business faiure rates and you will see that most fail. It appears that many small businesses fail because the owners are delusional about what it takes to run a business.

As a small business owner I couldn’t agree more that government regs are burdensome, and more on small business than large. I don’t have the option of pushing things off to "legal" or "HR" or "accounting", I do them myself when I am not doing the productive portion of my business. I am with Chris, you can’t have it both ways. Unless, of course, you are a government agency with their unlimited source of printed and borrowed (never to be repaid) money.

I have a simple remedy for what has become an onerous and unworkable regulatory burden. Every regulation should have a "sunset" provision of no more than 2-3 years, after which it expires unless renewed. No regulation can be renewed under an omnibus act covering a multitude of regulations. Every single one of them must be: a) justified for renewal based on an objective and published cost/benefit analysis after receiving input from all concerned parties; and b) individually and explicitly approved for renewal after such analysis, else it expires. Alongside every regulation, the names of every responsible government representative who voted for/against must be published. This will give all the bureaucrats something to do besides just creating new regulations, will provide some accountability for the costs of existing ones, and over time will winnow the number of regulations down to those that serve some useful purpose.

[quote=GDon]
For instance, 18 U.S.C. 1821, insures a more risk-free America, by regulating and possibly penalizing persons for up to one year in prison, for taking their grandmother’s false teeth to another state without the authorization of a local dentist. [/quote]

I actually looked up this law. My intent is not to unduly criticize, but to show how things like this can be misconstrued and turned into urban legend. Here’s the link for anyone who wishes to check my reasoning:

http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t17t20+873+50++%2818%20U.S.C.%201821%29%20%20%20%20%20%20%20%20%20%20

The point of the law is to make illegal, under the interstate commerce clause, the interstate transportation of dentures and other dental devices that are made, under the laws of individual states, by someone other than a licensed dentist or other person under the supervision of a licensed dentist. In other words, taking an illegally manufactured device to another state does not make the device legal. BTW, the one year limitation makes it a misdemeanor, so you won’t have to spend time in the big house with the real bad guys. Besides, if your grandmother’s false teeth are legally made, you can transport them anywhere you wish, although she may have some objection. ;^)

More generally, if everyone were motivated to do the right thing because it’s the right thing to do, our legal framework would be minimal. Unfortunately there are plenty of bad actors out there. I heard of a rule of thumb taught in business schools (those of you who have actually gone to business school can correct me if I’m wrong) that 20% of business owners do the right thing, even if it costs them some profit. The other 80% will generally do the minimum necessary to meet the law or will intentionally try to get around the law to maximize profits. Does this sometimes lead to absurd results? Of course. Common sense is sometimes the victim.

Having spent part of my career as an enforcer of gov’t regulations, I am aware that well intentioned regulations can be misapplied. But, it was my experience that an experienced qualified regulator, working with a willing individual or business person, can almost always come to a reasonable solution for everyone involved. Only the real scoff laws get hammered.

Yet another reason why we are in for a long struggle…

Coop, Mark, I couldn’t agree more. A significant reason why I am a former business owner is all the arduous reporting, filing, collecting that various gov’t tax authority’s and regulatory agencies require. Most small businesses cannot afford a full-time accountant to keep up with all that crap. It then falls to the owner who spends too much time doing gov’t paperwork (because it’s their butt that’s at risk) instead of running the business… incidentally, it is my opinion that this is why most small businesses fail; not because the entrepreneur is not a good "mechanic" at what he does. It’s because he unknowingly jumps into an ever increasing bureaucratic paper-shuffling vortex that, with time, defeats his best efforts.

Running a successful business is very, very hard work.

For me, it wasn’t worth the aggravation. I have found it much easier to just manage my investments.

 

Do we regulate or don’t we regulate? Who gets to regulate?

Show me in the US Constitution where the Federal Government was given the authority to decide on these regulations. And don’t show me the Interstate Commerce Clause in which Congress finally found a loop-hole in the Constitution (I believe in the early 1900’s) that they have used to regulate the bat-snot out of our lives.

Yes, there is a moral dilemma in America in which unscrupulous people take advantage of others, but that’s the price we pay in a FREE society. James Madison (I think) said that our Constitution was good only for a moral people. Our Founders knew that immoral people could take advantage of others, but that is the price of Freedom. Use yours to speak out against immoral people who take advantage of others. Regulation by the Federal government is unconstitutional and against the Natural Laws of Freedom that our Country was founded upon.

Richard

Chris,

Let me start by saying I really enjoy your site and the CC was brilliant. You have been a beacon in an otherwise foggy period in the worlds history and I have considered you a visionary. However I must say I was disheartened by your blasting of free trade. I hope your were lashing out at globalization not trade? Trade is fine as long as for the most part the parties involved in the trading of goods and services all share the same beliefs with regards to employee rights, the environment and social responsibility (read the war for wealth by Gabor Stiengart).

As an outsider looking in (Canadian) it seems that every time the US loses a competitive edge in an industry it cries foul and tries to impose trade barriers i.e. steel, softwood lumber non GM food (demanding that Europe force its populace to eat it even though they do not want it for the most part) come to mind recently. Don’t get me wrong I am a proud supporter of the US but over the last 10 years I have seen a trend I do not like culminating in the invasion of Iraq do to a potential lessening of its grip on the world wide oil industry (read Richard Heinberg "the party’s over").

In the coming crisis I think the US will need its friends; Canada, Australia and the Europeans. We will all need to stick together and trade together to get through this period of transition. If we stop trading, heaven help us all.

 

So please tell me I took it all out of context!

 

E

 

Richard,

Thanks for throwing in the Constitutional aspect. That is always on my mind and many tend to ignore it or be uneducated about it. It really is the regulator of all regulators.

The group in charge of the regulating is the one most in need of being regulated. There is more fraud, corruption, deceit and damage to others done by the Federal government than any other industry. The examples are innumerable in local government as well.