Tuesday, November 09, 2010

Regulation and its discontents

Today's New York Times features an article that examines the plight of small business owners in Astoria, Queens. A short excerpt:
For Al Lau, 39, and his wife, Michele Addeo, 38, the owners of the Louisiana-style restaurant, Sugarfreak, [failure] would probably mean losing everything they have.

...They have run through their savings — Mr. Lau is a lawyer and Ms. Addeo is a physical therapist — and hit the limit on their credit cards to finance their restaurant, which is not yet finished. They spent $150,000 on kitchen equipment and $25,000 on lawyers after a neighborhood group opposed their application for a liquor license. (The restaurant has been granted a provisional license.)

The store’s wood floor was rotten, and it took two months to get the necessary permit to replace it, then an additional five months and $20,000 to replace a pipe connecting a water main to the restaurant.

They are now waiting for a final inspection while applying the finishing touches.
While the story does not at all focus on the role of regulation, it is hard to miss the prominent role it plays in this couple's travails. In a world where time is money -- and the article notes the couple is paying $3,000 per month in rent until the restaurant is ready to open -- the costs certainly add up. Two months for a permit to replace a rotten floor, time and money to secure a provisional liquor license, months spent dealing with the municipal water authority and an unknown amount of time waiting for an inspection.

And yet for some reason our friends on the left continue to believe that deregulation is a dirty word and concept to be viewed with suspicion. It would be hilarious if it wasn't so tragic watching Democrats excoriate the alleged evils of deregulation, pile more such burdens on to business, and then earnestly wonder why the economy isn't creating more jobs.

Thankfully, Rep. Eric Cantor -- in line to be the next House Majority Leader -- seems to be at least aware of the problem, calling for a review of existing federal regulations:
Job creators across this country have made clear that resolving policy uncertainty in Washington and reducing the costs of government rules, regulations, statutes, and barriers to trade are some of the most effective things that a Republican controlled House can do to lay the groundwork for economic recovery and job creation.

...It is my desire – working through each of our committees – to conduct an immediate and comprehensive review of existing and proposed government rules, regulations, and statutes that impose additional, unnecessary costs on employers and job creators. Interim and final reports would be issued by each committee over the course of the first half of 2011.
As with most things that emanate from the Republican leadership, this should be viewed with skepticism until it actually happens. But at least they are sounding the right tone.

Related: Read this excellent -- and short -- blog post from Sallie James. Also, The Economist looks at the impact of business on bureaucracy froma global perspective.


Plans to Prosper said...

Sadly, every one of those regulatory burdens is a local matter, and last week's Republican victory won't make a difference for any of them.

Colin said...

That's a very good point.