Why Entrepreneurs Hate Statists

https://grantcoulson.files.wordpress.com/2014/04/incentiveseverywherepicturecorrect1.jpg?w=444&h=288

    Do not think about, write about or deal with  human behavior without determining the effects of incentives.

     Wherein we see that entrepreneurs are punished endlessly by government apparatchiks who ask for compliance to the most pointless and destructive regulations. They see no relief, only an increase in the cost and annoyance.

What Small Business Leaders Think About Obama
David L. Goetsch

I recently sat through a meeting of small business CEOs who had gathered to discuss how the Obama administration’s policies and regulations are affecting them. There were 30 CEOs in the room, all of them leaders of successful companies that have been in operation for a long time. The newest company in the room had been in business 15 years, the oldest 38. The business leaders in the room represented a broad cross-section of the private sector (e.g. engineering, manufacturing, construction, retail, hospitality, banking, healthcare, and real estate). This was an important meeting. Why? Because of the role small businesses play in America’s economy, and what the Obama administration’s policies and regulations are doing to those businesses.  Small businesses create two-thirds of all new jobs in America, employ more than half of the people who work in the private sector, and generate almost half of America’s gross domestic product (GDP). That is the good news. The bad news is that the during the Obama presidency the Index of Small Business Optimism has dropped to 91.4 (from 1978 to 2008 it was 100). Further, 90 percent of small business owners support reforming the regulatory process, 72 percent believe that government regulations are hurting the business environment, and 62 percent claim that that government laws, regulations, taxes, and fees are a bigger obstacle to success than the competition from foreign competitors.

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     I’m from the government and I’m here to help. I’m from private industry and I’m begging the government to stop helping.

Although the CEOs gathered in my meeting came from different business backgrounds, they all had one thing in common: a conviction that the biggest obstacle they face as business executives is the federal government. Policies and regulations promulgated by the federal government are making it increasingly difficult for small businesses to remain in business. The problem is the rapidly rising cost of regulatory compliance. Small businesses are being buried in an avalanche of compliance paperwork. The consensus in the room was that there has never been a time when it was more difficult to run a small business in America. The problem, according to the CEOs gathered in that room, is a combination of burdensome government regulations and ill-advised policies which, taken together, are crushing the life out of small businesses.

One CEO summed up the thoughts of his counterparts when he said: “It’s as if the government wants to put us out of business. If you are not a mega-corporation like GM that qualifies for government bailouts every time you suffer the consequences of poor management and inferior quality, you are out of luck with this administration. We don’t want any help from the federal government, and we don’t need it. All we want is for the federal government to get off of our backs and let us do what we know how to do. If we were just starting today, most of us wouldn’t even bother trying to establish a small business—not knowing what we know now.”

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     Jobs-for-life government employees can do what they want. This is not new, it’s just that there are more of them all the time.

As the discussion progressed, it became clear that every CEO in the room thought his or her company had stayed in business up to this point, not because of the federal government but in spite of it. It also became clear that the CEOs were concerned about the futures of their companies as the Obama administration continues to turn out burdensome regulations like some mindless bureaucratic factory. Concerning the future of his company, one CEO commented that “I used to worry about my competitors, the ups and downs of the economy, and the Internet’s intrusion into my business. Now I worry about the federal government. Frankly, it is easier for me to deal with these other challenges than with the federal government. I can take steps to out-perform my competitors, weather the ups and downs of the economy, and compete with the Internet, but there is little or nothing I can do to get relief from the heavy hand of a federal government that does not care about me.”

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    A statist is never concerned about wealth creation, only wealth distribution to the “worthy” poor and misfortunate and, oh ya, government employees.

How heavy is the heavy hand of the federal government on small businesses? Consider the following facts provided by the National Federation of Independent Businesses (NFIB):

    As I write these words there are more than 3,000 new regulations in the bureaucratic pipeline and almost a third of them will affect small businesses.
    In the first two months of 2014, just 12 of the 72 new regulations enacted carried a compliance cost of $100 million.
    There are currently more than 175,000 pages in the federal register—more than 80,000 pages were added in just one year (2013).
    In one year (2013), the cost of complying with federal regulations was $112 billion (67 million man-hours of paperwork).

Not one business leader in the room was optimistic about the future of his or her business specifically or small business in general. One CEO closed the meeting with this comment: “If Barack Obama ran for office with the secret agenda to kill small business in America, he could not be doing a better job.”

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     The Obama administration brought in a “new day” in politics. Alas the new day is much worse than the old days.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Days of Songs and Mirrors: A Jacobite in the ‘45.”
Cui Bono–Cherchez les Contingencies

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