When I’m asked about the problems facing small businesses today, one of the most important factors that I often cite is the detrimental effect of government regulation. Today, the Wall Street Journal published an editorial that should help shine further light on just how big of a regulatory problem small businesses have.
You should read the whole article, but here are some of the key highlights that I think are most important:
- We’re currently seeing more “economically significant” regulations than ever before. The government uses that label to describe regulations that cost the economy at least $100 million per year. The Obama administration has finalized an average of 84 economically significant regulations per year, compared to 62 per year under the George W. Bush administration and, better still, just 56 per year under the Clinton administration.
- Politicians from both parties have been on a regulatory binge lately. The last two years of the Bush administration saw just as many regulations as the first two years of the Obama administration. This is an issue confronting members of both parties, who fall in love with writing new rules whenever they come into power.
- While Cass Sunstein has been tasked by the Obama administration with eliminating unnecessary regulations, those that are cut out are just a drop in the bucket compared with the new rules being put in place. For every rule that’s eliminated—like the recent decision to no longer force the milk and dairy industry to follow the same procedures as after a major oil spill—we get just dozens more new rules from countless federal agencies, the National Labor Relations Board, health care, and beyond.
The idea that all these regulations are holding businesses back and preventing us from breaking out of this recession is no myth. The biggest corporations lobby for special exemptions and to stop rules that might hurt them, but small businesses in particular are caught in the crossfire. They have to abide by both the rules that government officials try to put on business in general (with possible exemptions for political favorites) as well as those regulations that big businesses lobby for, in order to keep out unwanted competition.
This is a very real problem, and people all over Washington, no matter what party they’re from, have contributed to it. In the middle of a recession, adding more and more costly regulations prevents businesses from hiring people, from spending money on new equipment, or anything else. The perpetual motion machine of new regulations paralyzes businesspeople.
I’d like to see a moratorium on regulations. Just freeze our current system in place for a year, two years, so that businesses have a chance to figure out what the rules are, how much they will cost, and how to do business in this environment. Create stability, so that businesses can finally get the confidence they need to get growing again. Growth is what we need, and that would go a long way toward creating it.