Have Big Government Regulations on Small Businesses Gone Way Overboard?

In a surprising and startling editorial this week in The Wall Street Journal, a new study by the Institute for Justice is cited, detailing regulation after regulation, heaped upon entrepreneurs and small businesses in Los Angeles.  You might think that Los Angeles with an unemployment rate of 13.7% in September might want to encourage people to start small businesses and earn a living for themselves, or, better yet, start small businesses and create new jobs for others as well as themselves.  But, that doesn’t seem to be the case according to The Wall Street Journal.  Have big government regulations on small businesses gone way overboard?  Are regulations helping to keep unemployment high?  And, importantly, are they also holding back the American economy?  Let’s talk about these questions more right now …

Here are some facts from the study.  In Los Angeles, if you lose your job and you want to make some money, you might think of starting a business.  In LA, if you want to earn some money hanging wallpaper, trimming trees, or building fences, you must first obtain a license called a “speciality contractor” license.  But, don’t think you can count on getting that license in a day or a week.  It can take years!  Suppose you have a flair for clothing and want to design and make hip clothes for teenagers.  Sorry to say.  But, in LA, you need a garment manufacturer’s license.

Still other examples of enterprise-crippling regulations.  In Los Angeles, even with a license from the LA County Department of Health, you are not allowed to open a sidewalk vending business, push your cart, and bring in a little income.  If you’re a taxi cab driver, you are not allowed to work for yourself.  You must lease a cab at very high rates. 

Dog-sitting, sewing clothes, cutting hair – you guessed it – there are regulations!  Maybe, you want to sell used paperback books.  If you do, in LA you’re required to get a “police permit.”

While some regulations were probably created to foster public health and safety, many regulations seem designed to help certain economic interests over those of other people.  Regardless of the reasons such regulations were created, they are definitely stifling economic growth and hurting individuals and small businesses who are trying to survive in a tough economy.

Clearly, free enterprise is not so free anymore in some cities across the U. S.  Not only do entrepreneurs have to deal with burdensome Federal and State taxes and regulations, but they also have to overcome City and County taxes and regulations.  Have big government regulations on small businesses gone way overboard?  The answer is a resounding Yes!  Americans need economic freedom and free enterprise to ignite the engines of small business job growth.

Choosing the Good Life Blog by Gerard Francis Lameiro, Ph.D.

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