Monday, September 30, 2013

The Vanishing Entrepreneur

Law professor Donna Matias, director of a legal clinic at the University of San Diego School of Law, discusses the absurd regulations that low- and moderate-income entrepreneurs must deal with. She tells the story of one client who wanted to operate a simple transportation service, but was faced with an incredible mountain of  regulations as a result. The video is here.

In a situation similar to the one Matias details, I'm familiar with a Puerto Rican-American, who wanted to launch a gourmet hot dog cart in Los Angeles. He was a dish washer at the Standard Hotel in Los Angeles and whenever I went there to the roof top bar, it was a pleasure to see his enthusiasm for his venture. He saved up money while studying the different carts, but when he was ready  to buy, he learned he needed one type of license, the next week he learned of another and yet another. The license process sapped the energy out of him and made the venture much more risky given the costs of the licenses and the fact that one of the licenses required him to hire a lawyer because it was so complex. He finally gave up.

This is how entrepreneurship is being suffocated in the country. Regulations are making the rags to riches success stories near impossible. The regulations prevent the little guy from getting a footing and protects large corporations.

12 comments:

  1. One purpose of government is to protect established businesses. Government enforces monopolies. This is great if you are established, wealthy and politically connected. But not so good for the the vast majority of people on the bottom trying to work their way up.

    Oh... one more thing, it gets worse as time passes.

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  2. And hence why our system is facist, not remotely socialist. Eventually the system will fail and the productive will take over again.

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    1. And hopefully without the spasm that accompanied the last great Fascist experiment...

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    2. We will probably not be so lucky. The saber is being rattled daily, and nerves are on edge. I pray that peace and logic prevail, but history and simple observation of the current state of the world are not encouraging. Sad. Scary.

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  3. I have several projects in the fires so to speak, aside from one core successful small business.

    A major decision point for me on whether I try a new business model is the amount of regulatory burden associated with it and whether the model will require increased interaction with gov't over time.

    If I think it does or will, I step away, most of the time. There are times when it still might even be profitable to endure such regulation/interaction, but I still don't want to spend my time doing it so I'll skip it anyway.

    After watching this video though, I have to say that sometimes that I know I'm breaking a law in certain business decisions I make, but I do it anyway. If I didn't do it from time to time as a calculated risk I'd have no business.

    I think that's the mistake some entrepreneurs make IMHO. They are so focused in adhering to the letter of the law, which is now in so many areas, that they never get it going to start.

    You'd be surprised how many times you can get away with something illegal(don't confuse illegality with immorality either, VERY IMPORTANT!) and just keep trucking...it's part of being an entrepreneur....every time I hear "you can't do that!" from someone it motivates me...I actually inwardly laugh.

    The few times that my flouting of certain laws caught me in some regulatory web I've been either able to bullshit my way out of it or the fines were so minimal when I was done that it didn't matter much.

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  4. I remember sitting in a B-school continuing ed classroom with a group of entrepreneurial business owners and executives. The question was asked, "What do you do if your revenues and sales begin to fall?" Responses included "lay off staff", "reduce overhead", close non-profitable operations, etc.

    It so happened that a U. S. Congressman was present in the class. The instructor asked "How about you in government? How do you you deal with a shortfall in revenues? The answer came without a moment's hesitation, "Oh we just go get some more." The room went silent as all present turned to see what kind of idiot would make such a comment.

    It is how government views us. They can steal as much from us as they want because it's the "law" and there is not a thing we can do about it. "The only winning move is not to play..."

    Joshua: Greetings, Professor Falken.
    Stephen Falken: Hello, Joshua.
    Joshua: A strange game. The only winning move is not to play. How about a nice game of chess?

    Source: Movie, War Games

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  5. Food and transportation are heavily regulated because history has proven that they when they are not heavily regulated, people get hurt/sick. If you want to start a business that does not endanger people, it's quite easy. Anyone who says otherwise is simply ignorant.

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    1. Any business that hurt or sickened people (except gov't) would quickly lose customers. I do NOT need the gov't to protect me from every danger in the world.

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    2. The problem with historical laissez faire is that you have to take shysters, fraudsters and thieves to government court run by government judges and you need an expensive government licensed attorney to cut through oceans of crap.

      Further, government "regulation" of the Robber Barons came at the behest and control of the Robber Barons because they could not monopolize the market otherwise. The entire phony "progressive" narrative of the Robber Barons is a lie demolished by Gabriel Kolko in 1963 in a book I've owned since 1973.

      http://tinyurl.com/k7evpg7

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    3. 39,000 interstate traffic fatalities tell a different story, Jerry. Despite all the evidence to the contrary, gov has many of us convinced we'd all die tomorrow if they didn't steal our money and order us around.

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    4. Watch the video, Jerry so you will no longer be ignorant, or is that a choice?

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  6. I used that video in my Introduction to Economics classes at a community college to show the effects of interventionism/fascism. Good example.

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