Saturday, April 14, 2012

Tales From the Over Regulated State - A Series

Today, a couple of classic examples of how our government favors large businesses over small businesses.

Their thinking goes like this: large businesses can give us more money.  Large businesses don't like small businesses.  Let's create laws that small businesses can't afford.  That will destroy them and allow the large businesses to make more money, which we can demand in tribute.

This story comes from PJ Tatler.  Meet Sabrina Loving.  Ms. Loving was working in the mortgage industry as it came to a crashing collapse in 2007/08. Unemployed, she started a small business on Chicago’s South Side to provide financial advice to low income minority customers.  Watch her story here:

Quoting from the PJ Tatler piece:
Now the IRS is saying these rules are necessary to root out unscrupulous tax return preparers and to cut down on erroneous reports, but the solution the IRS proposes does not solve the problem: it would only drive bad tax preparers underground with no way to regulate them at all. And worse, it would put honest accountants out of business.

And if that’s not enough, let’s look at how the IRS is applying these rules. Large tax chains like H&R Block and Jackson Hewitt don’t need to meet these requirements — yet small tax prep companies do. And if you are registered with the CPA you also don’t have to worry about adhering to the new regulations.

Simply put, these new rules will not make independent tax preparers better at their jobs, they are in place to force them out of business for the benefit of larger tax prep chains.
This is a simple example of a common tactic.  The big tax preparers are exempt, and the professional society-blessed CPA preparers are exempt: only the small business just trying to help people (and make a living, of course) are the targets.  It's like the consumer product safety bill I talked about two years ago, where small American businesses are shut down because they can't afford the tests, but continues to ship toys made out of every kind of toxic crap this side of radioactive waste.

Probably the most common tactic that businesses use to suppress competition is to get licensing laws passed.  There has been a nationwide push to force women who do hair braiding - these are typically poor African women immigrants - to get state cosmetology licenses  (summary here).  The money quote:
Who is snitching to the feds about these illegal shops? Surprisingly, licensed cosmetologists are up in arms about these "illegal" braiding businesses.
These licensed cosmetologists want to force these women to fork out money, which the local governments are only too eager to take, to protect the citizenry from... incompetent braiding?  Srsly?  How much money do these low end businesses need to put up?  That post offers only one example:
In Illinois, it takes a total of 1,500 hours and $15,000 to legitimize yourself as a braider, then a person can apply for her license.
How much licensing is necessary?  I can't say.  In my state (Florida) they regulate roofers and other construction businesses primarily because of shoddy workers making the rounds after hurricanes.  Although I still believe caveat emptor should rule as a policy, insurance companies will only pay for roofers who the state certifies.  A three way business/government back scratching.  Have some people been subjected to shoddy work when they needed a roof rebuilt?  I'm sure.  Does this really help?  I'm much less sure.

An acquaintance of mine used to do manicures for women who couldn't pay for it; to help them look better or feel better for a job interview or "just because".  She was shut down because she wasn't state licensed.  Did this serve the state's best interest?

This sort of law is always going to pass.  There is simply no political downside to saying we want better trained tax preparers, hair braiders, or roofers.  It sounds reasonable. No one votes against a toy safety act because they don't want to be painted as someone who feels kids should get hurt by unsafe toys.  No one ever questions whether the laws actually do any good, they just write more laws.  And the noose around our collective necks tightens just a little more with every new regulation.    


  1. Fairly recently, a couple was going to be fined close to two hundred thousand dollars (IIRC) for selling too many rabbits. Some regulation they were unaware of - and which was completely absurd - fined them thousands of dollars per rabbit. (I've probably got the numbers completely wrong, but you get the idea.)

    Several years back, I recall reading about some monks who built caskets for those who could not afford them for their deceased loved ones. The funeral service industry in their state complained, and sicced the state regulatory apparatus upon them, forcing them to cease and desist. I seem to recall they were trying to fight the issue, or get a waiver, but I never heard the outcome.

    It isn't about income, its about control. And now, it isn't simply about control, but about destroying the economy so that socialism, Marxism, can be fully implemented in this country, rather than only "mostly" implemented, as it currently is.

    Little Barry and his Commiczars won't be satisfied until America has been brought to her knees. (BO's latest Executive order will suffocate shale gas production by placing it under the regulatory control of a number of Federal agencies:

    1. I know the story about the $4 million dollar bunnies. The last I heard the feds backed of the $90,000 per bunny fine and were in the range of $300 each. Still way too much, but they "clearly acted stupidly", to quote fearless leader.

      On a more serious note, I hadn't seen Friday's executive order attempt to shut down natural gas production

      These guys really need to go. Can't be too soon.

  2. "Their thinking goes like this: large businesses can give us more money. Large businesses don't like small businesses. Let's create laws that small businesses can't afford. That will destroy them and allow the large businesses to make more money, which we can demand in tribute."

    You've got it exactly backwards: The government doesn't write these laws, they just pass them. They're written by industry lobbyists and handed whole cloth to the legislators who "sponsor" them.

    1. As I've oft quoted, "We are our own worst enemy"