Friday, May 11, 2012

Doing Business the American Mixed Economy Way (Bagel Edition)

Joe Salerno reports:
A Brooklyn bagel shop owner was assessed $1, 650 in fines by a New York City Health Inspector because–get ready for this–poppy and sesame seeds fall to the floor as he makes his bagels.  Alex Gormakh, the owner and a recent immigrant from Russia, opened  B & B Empire Bagel Cafe in June 2011.  Gormakh’s deli passed inspections both before and after he was cited for violations in October, and in the most recent inspection it received the highest cleanliness grade of “A.”   Nevertheless, his appeal of the fine has been denied at two separate hearings.   As a fellow Brooklyn bagel shop owner, whose establishment did pass inspection, points out, no matter how many times a day you sweep there will always be an accumulation of seeds on the floor.  To avoid future citations, Gormakh and his son have now invested almost $900,000 in larger stainless steel preparation tables in the hope of avoiding seed fall out and a water-filter vacuum to suck up any wayward seeds. 
But Gormakh has learned a valuable lesson in doing business in the American mixed economy:  “If you want to work you have to pay.  In Russia, they call it corruption.  Here they call it something else.  Either way, you have to pay.”

Note what Gormakh had to pay to remedy the situation: $900,000. Does this me a bagel shop owner with fewer cash resources would have been put out of business? This is an example of why the rich are getting richer and everyone else is getting squeezed. It is becoming extremely difficult for up and comers because of onerous regulations that only the already rich can deal with. 


6 comments:

  1. On the other hand, think of of all those seeds on the floor...so icky and unsanitary. Sometimes the state is really looking out for us!

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  2. It's interesting that you decry regulation as a whole instead of bureaucracy, bribery, or back-scratching - which are almost certainly the cause of this issue.

    His comments about the Russian corruption make it clear that this owner seems unwilling to play the same game with American rules. He didn't grease the right palms, and now he's paying for it. Removing regulation isn't the solution, addressing who is attached to the greasy palm is.

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    1. Regulation creates bureaucracy, bribery, or backscratching.

      Removing regulation would remove the greasy palm or the corruption. The business and the customer are voluntarily engaging in a mutually beneficial exchange. If not, business loses a customer. Why corrupt this with a third party who can only exist on stolen funds (taxes) and eventually bribes when tempted by the power trip to "improve" the exchange?

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  3. Ah, "the regulation works so long as we hire angels to enforce it" argument. Until we find those angels, who regulates the regulator? Or, are we to accept that an entity that has the power to use coercion to get its way can self regulate? Regulation is a great idea if you can find a way to remove government self-interest, but until then its largely a waste of money.

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  4. Investing $900,000 in order to avoid repetitions of $1650 fine? Why not just keep paying the fines; how often do inespections take place? or pay the mafia (or whatever today's equivalent thereof) $100,000 to have the appropriate words with whoever is obvious out to get a kickback.

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    1. Do you really think you can stay open paying fines and ignoring the mob er government? Where I live they will shut you down at some point.

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