Banner ad

Monday, February 04, 2013

Reality mugging liberals

So Matthew Yglesias is discovering the regulatory burden government puts on people who want to open a very small business, renting out his old condo.
I’m becoming one. Entrepreneurship—even on the smallest and most banal scale—turns out to be a time-consuming pain in the you-know-what. My personal inconveniences aren’t a big deal, but in the aggregate, the difficulty of launching a business is a problem and it may be a more important one as time goes on.

In the District of Columbia, I need to get a simple Basic Business License to rent out a single dwelling. After puzzling over the Department of Consumer and Regulatory Affairs website for a bit, it became clear that step No. 1 was actually to file form FR-500 with the Office of Tax and Revenue, which you can do online. Then it was time to hustle down to the DCRA (which closes at 4:30 p.m.) to file the paperwork. Once there, I learned that filing the FR-500 online wasn’t good enough—I needed a hard copy. Fortunately, the Office and Tax and Revenue was right across the street, so I went there and refiled. Then it was back to the DCRA to stand in line to get a number, wait for the number to be called, do some more paperwork, wait in another line for the cashier, fork over $100 in fees, then get a slip from the cashier to finalize the paperwork.

But then it turned out I needed to go to a third office, the Rental Accommodations Division of the Department of Housing and Community Development. It closes at 3:30 in the afternoon and required a 15-minute walk through a sketchy neighborhood. So the next morning I went down to that Rental Accommodations office to file a paper claiming exemption from D.C.’s rent control law.

The striking thing about all this isn’t so much that it was annoying—which it was—but that it had basically nothing to do with what the main purpose of landlord regulation should be—making sure I’m not luring tenants into some kind of unsafe situation. The part where the unit gets inspected to see if it’s up to code is a separate step. I was instructed to await a scheduling call that ought to take place sometime in the next 10 business days.

Not that I expect your pity. I don’t even pity myself. Going through the process, I mostly felt lucky to be a fluent-English-speaking college graduate with a flexible work schedule. But the presence of a stray pamphlet offering translation into Spanish, Chinese, or Amharic seemed like it would be only marginally useful to an immigrant entrepreneur. A person who needs to be at her day job from 9 to 5 would have a huge problem even getting to these offices while they’re open.
This experience has helped him understand why people become conservatives in the first place.
Red tape, long lines, inconvenient office hours, and other logistical hassles probably won’t stop tomorrow’s super-genius from launching the next great billion-dollar company. But it’s a large and needless deterrent to the formation of the humble workaday firms that for many people are a path to autonomy and prosperity.
Well, yes. In fact, that has been a conservative message for quite some time now. Perhaps Yglesias could take some time and talk to his liberal friends and they can stop cheering on "Obama's Regulatory Rampage" which is just going to become even worse in his second term than it was in his first. Don't expect Congress to be a check on the President as he uses administrative edicts to evade the normal checks and balances. This has been an increasing trend in past years from both parties' presidents, but Obama has really kicked it into overdrive. And all these regulations take a big bite out of economic growth.

Yglesias's story reminds me of the insights that George McGovern finally discovered about government's regulatory burdens after he retired and bought an inn in New England. He finally got it about how government can but such restrictions on businesses that they go broke or cut back on employees to meet those restrictions.
In services, however, consumers do have a choice when faced with higher prices. You may have to stay in a hotel while on vacation, but you can stay fewer days. You can eat in restaurants fewer times per month, or forgo a number of services from car washes to shoeshines. Every such decision eventually results in job losses for someone. And often these are the people without the skills to help themselves -- the people I've spent a lifetime trying to help.

In short, "one-size-fits-all" rules for business ignore the reality of the marketplace. And setting thresholds for regulatory guidelines at artificial levels -- e.g., 50 employees or more, $500,000 in sales -- takes no account of other realities, such as profit margins, labor intensive vs. capital intensive businesses, and local market economics.
Maybe if a few more liberals get mugged by reality, we could start creating a better business environment for the country.

No comments: