Regulations are a barrier to entry for small businesses

I attended the most recent meeting of the Eastern Panhandle Business Association earlier this month. On its website the EPBA says that it has been described as a “Chamber of Commerce with Attitude.” For the record, I belong to both the Jefferson County Chamber of Commerce and the EPBA and I would be inclined to agree with that assessment, but that’s a subject for another column.

The EPBA meeting featured a candidate forum for the West Virginia House of Delegates for the districts within Jefferson County: the 65th, 66th and 67th. Yes, it’s that time again! In the 67th, incumbent Democrat Stephen Skinner faces Republican challenger Patricia Rucker; in the 66th, incumbent Republican Paul Espinosa faces Mountain Party challenger Daniel Lutz and in the 65th, Democrat incumbent Tiffany Lawrence faces Republican challenger Jill Upson.

Every candidate was represented at the forum except for the Democrats: Delegates Stephen Skinner and Tiffany Lawrence. I would call that a snub and in my humble opinion calls into question their concern for the business climate and economy in the Eastern Panhandle. Heaven forbid that a Republican doesn’t show up for the League of Women Voters or NAACP forums and there are all sorts of recriminations. If anyone can provide me with the name of a Republican that the NAACP has ever endorsed for the West Virginia House of Delegates I would be humbly in your debt, but I don’t think you’ll find one. And yet, Republican candidates have shown up faithfully election after election.

But I digress. All that said, kudos to Mountain Party candidate Daniel Lutz for showing up. The Mountain Party has less than 1 percent of registered voters in West Virginia and, like the Democrats in West Virginia, are not known as being “business friendly.”             Wikipedia describes the Mountain Party as “a progressive and environmentalist party” and says that in 2008 it became an affiliate of the national Green Party. On a side note, former Delegate John Doyle, a Democrat from Shepherdstown, used to say that he felt more aligned with the Mountain Party platform than that of his own party.

Interestingly, Lutz proposed legislation to help promote cottage industries in West Virginia. According to the Merriam Webster Dictionary, “cottage industry” is defined as a system for making products to sell in which people work in their own homes and use their own equipment. His proposal included “removing all regulations” for cottage businesses with annual revenues of $75,000 or less, although he left open the possibility of raising the cap. He said that many states already have such laws and he’s right about that. According to the Johns Hopkins Center for a Livable Future there are only seven states that have no laws whatsoever dealing with cottage industries and most of the laws on the books apply to home-based food businesses.

At first blush, laws to promote cottage Industry sound like a great idea — remove onerous regulation so that entrepreneurs can start new businesses. However, upon further reflection, it’s really an admission that regulations are barriers to entry for small startup businesses and even protect larger established ones from competition. Capping revenues at very low thresholds is further evidence of this point. It’s like saying, stay small if you know what’s good for you and don’t have ambitions of being able to compete with the big boys.

Rather than carving out a small segment of the economy that is hurt by regulation, let’s look at the bigger picture. While regulations on the state level can and do inhibit business development, on the federal level it reaches the point of absurdity.

Doug French, contributing editor for Casey Research, wrote recently that “Columbia law professor John Coffee estimates the federal government has the criminal process at its disposal to enforce as many as 300,000 federal regulations.” He goes on to say that James L. Buckley, “one of the few” who has served in all three branches of government, noted in a Wall Street Journal interview that the U.S. Code, the entire body of federal statutory law, has gone from one volume before the New Deal to 33 or 34 volumes by the 2012 edition, which is still being printed.

Said Buckley, “There are now 235 volumes of regulations that occupy …17 feet of shelf space of six-point or seven-point type … You can find yourself in jail for violating a statute you would never have any reason to know existed.”

Now that’s rapid growth, but not the right kind. In fact, it’s extremism of the worst kind. It’s time that we take a more common sense and yes, a more constitutional approach, and rethink regulation from top to bottom.

I was pleasantly surprised to see Lutz thinking along the lines of how to stimulate economic growth. It shows that he understands that regulations are a problem. Yet, while recognizing the problem that regulation poses for startups, he misses the point that regulations hurt economic growth generally. Still, he’s at least one step ahead of the Democrats.

— Elliot Simon writes from Harpers Ferry



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One Response to Regulations are a barrier to entry for small businesses

  1. Great article, Elliott. It’s the old adage: why try to better yourself if it will be stolen from you. Do not progressives realize they are taking away all incentives for jobs and a growing economy…if I take from the rich I take away the opportunity for success that I might have.

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