How Government Regulations Crush Small Business Before It Can Get Started

Under the best of circumstances, it’s tough to be an entrepreneur. You’ve got to come up with an idea, find the money to fund it, find the time to get it started, and even then, a lot of small, well run businesses lose money right off the bat. Show me someone who can create a business under those circumstances and make it thrive and I’ll show someone who’s usually amongst the most competent people in this country.

However, all of that is just the beginning of the dilemma for small business owners because then they have to deal with the real challenge: The burdensome regulations, expenses, and hassles created by the government.

Even as a blogger, we have them. I had a lawyer tell me it was a necessity for bloggers these days to have DMCA safe harbor protection, which costs $135 if you have multiple domains. Why? Because the DMCA created a situation where someone can post an excerpt from an article into your comments section and some jackass can make thousands of dollars suing you as a result. So, how does the safe harbor protection help you out? It gives him an official contact to get in touch with if he has a complaint, so he can ask you to take it down. You may be thinking: Wouldn’t your email address work just as well? Of course, it would, but there’s a class of scumbag shakedown artists out there, like Righthaven, that are looking for any excuse to sue people. So, if you don’t have an official contact point registered with the government, they can pretend they didn’t know who to contact. That sounds completely ridiculous, but that’s the whole point: It’s a completely ridiculous situation that has led to people having to waste their money to protect themselves from predators that have been enabled by the government of the United States.

Incidentally, the government created pain gets even worse if you’re a business like say, construction:

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Suppose you are about to start on the bottom rung of the construction business, as a one-man residential fencing contractor. If you hire American laborers, they might want to work as formal employees. Let’s just figure out what that would cost in Washington State, at the minimum wage of, say, $7.00 per hour. There’s the FICA tax of 7.65%. There’s the unemployment tax that, for a construction firm, is probably at the limit of 6 percent. Then there is workers compensation. That’s presently at $1.30 per hour for Landscape Construction and Renovation, or 18.6 percent of the hourly wage! All told, we are paying the government 32.2% in payroll taxes! You think that a seat-of-the-pants start-up contractor is going to pay all that (let alone plow through the bureaucratic forms)? No, he’s going to hire illegal workers, because they want to get paid in cash. Bank account? Forget it: he’ll cash checks at The Money Tree.

Let’s look beyond the case of the gyppo contractor and the illegal alien workers. What about the marginal unskilled kid from the inner city or the white working class? Is he better off with his employer paying FICA, unemployment, and workers’ compensation? Of course not. He’d be much better off if he got the money in cash rather than the promises of Social Security in forty years, unemployment benefits, and workers’ comp, all adding up to 32 percent of his wages that he never sees.

When ObamaCare gets going, of course, this situation will only get worse.

Gee, why are there so many jobs going overseas? Why aren’t these small businesses creating more jobs? Why do Americans seem to be less independent and industrious than they used to be? Why do so many Americans have less respect for the law than they once did?

When the government sticks its nose into everything and over regulates, not only do entrepreneurs lose, we ALL lose because it makes the economy less dynamic.

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