The "nanny state" and small business

Having recently formed a company to act as an umbrella for my books and book-related dealings, I was struck by an article in Ricochet about the issue of small businesses and over-zealous government regulation.

Kaitlyn (not her real name) just moved here from Georgia. Her husband is an auto mechanic. “He can fix anything with four wheels! Well, except my car – it runs like crap!” She went on at some length about how good he was at fixing things. His plan was to start his own shop once they moved here. They moved into a double-wide trailer that had a nice pole barn out back, which he planned to outfit with electric and a high-end air compressor, maybe even a grease pit, and start his own business.

He spent almost a year working on permits, licenses, inspections, and so on. He spoke to people from the county, city, state, feds, and the EPA. He talked to attorneys, accountants, and consultants to help wade through all the red tape. After about a year, he realized that the start-up costs were more than he was willing to gamble on the eventual success of a business that did not yet exist, so he got a job with the city, maintaining their trucks and mowing equipment. It doesn’t pay very well, but it has good benefits. It’s not a bad job, she says. Nothing to complain about. Everything is ok.

Kaitlyn did a great job on my hair, was very pleasant and personable, and is clearly very intelligent. She said that a few miles from their house, a barber recently retired. She considered buying his shop. She’s always dreamed of owning her own business. She said that’s the whole reason she went to cosmetology school. I said that sounded great – the shop is already set up, it has a large group of established customers, and she could expand from there.

She said that she spent several months looking into it, but she would need permits, licenses, inspections, and so on. I pointed out that it has been a barber’s shop for years, so the inspections, permits, and so on would already be done. She said that it would be a new business, and she would have to pay for all that to be done over again. She spoke with attorneys, accountants, and consultants to help wade through all the red tape – some of the same individuals that her husband had just consulted. She soon realized that the start-up costs were more than she was willing to gamble, so she got a job with a chain. The pay is not very good, and the benefits are lousy. One reason her husband took a government job was for the health insurance for their family. But she doesn’t mind working for Sport Clips – it’s a decent job, she says. Nothing to complain about. Everything is ok.

So how does this story end?

Well, in my view, it’s already ended. This young couple from a modest background has all the potential in the world. They’re both ambitious, intelligent, and very good at a valuable skill. They’re devoted to their family, their dreams, and each other. They dream of better things and are willing to gamble, willing to work hard today for a better tomorrow, and willing to take on the additional responsibilities that come with owning a business. They’re savvy enough with modern government to hire attorneys and consultants to help with the red tape.

And even they can’t open a new business, to do something they already know how to do.

There's more at the link.

This is a critical shortcoming from an overall economic perspective.  There are many articles and studies underlining how important small businesses are to the US economy.  I won't repeat them all here - a simple Internet search will produce more than you can easily digest.

Contrast the problems highlighted in that article to Miss D.'s and my experiences in forming a startup company here in Texas.  It seems to us that this state bends over backwards to make it easy, simple, cheap and convenient to set up your own business.  I was frankly amazed at how little red tape there was, not to mention the eagerness of more than one department of state government to help us understand what was required, and assist us to navigate the laws, regulations and rules governing small businesses in Texas.  It's like they actually want us to succeed, rather than put obstacles in our way!  Even registering vehicles, getting new drivers' licenses, and so on, was easier and simpler here than we'd encountered in other states, with a minimum of bureaucratic formalities.

Of course, that's why Texas is a top destination for internal immigrants in the USA right now.  It's got its economic head screwed on right.

Riding the rising tide of energy prices—and the job growth that goes with it—Texas claims the top spot in CNBC’s 2018 America’s Top States for Business rankings.

This is familiar territory for the Lone Star State, which becomes the first four-time winner in our annual study, now in its 12th year.

. . .

Texas has added more than 350,000 jobs in the past year, with the largest increase in the energy sector. Put another way, 1 in 7 jobs created in the United States in the past year was created in Texas.

. . .

But Texas is no one-trick pony, notching top 10 finishes not just in Economy but in five of our 10 categories of competitiveness, including Workforce (No. 7), Infrastructure (No. 1), Technology and Innovation (No. 9) and Access to Capital (No. 3). The state finishes with 1,651 out of 2,500 possible points.

. . .

Since we introduced our rankings in 2007, Texas has never finished outside the top five overall, always following the same basic formula. It started under former Gov. Rick Perry, who is now U.S. Secretary of Energy, and has continued under his fellow Republican successor, Gov. Greg Abbott. The state prides itself on business-friendly regulations, smart spending and low taxes. Texas levies no individual income tax and no corporate tax.

Again, more at the link.

It's nice to live in a state that's falling over itself to help us succeed.  Very refreshing!

Peter