"The urge to regulate is nothing new...but the extent of the regulatory state today is unprecedented in history. The problem in all of this is that regulation is like a hidden tax...when taxes go up it becomes more difficult for companies to succeed. Likewise when these hidden taxes - these regulatory costs - go up, it becomes harder and harder for entrepreneurs to thrive. What I would argue is that cottage industries are at the beginning of wealth creation."
I believe that it is necessary to take the middle road in this argument. Yes, government regulation does exist primarily as a hidden tax. The dramatic increase in government spending and in the national debt is destructive to our nation’s economy. Instead of cutting back on its spending and expenses, many politicians are seeking to supplement that spending through new taxes – often in the form of regulations.
This increase in regulations has proven detrimental to our economy. For example, in 1990, due to the increase in taxes and regulations, the Lockheed aircraft company left Burbank, California. This move caused the loss at an estimated 6,000 jobs and nearly destroyed the city’s economy. Even today, many are sending their work overseas – a process even more devastating to the American economy. Are the businesses at fault? – no! – Americans, in their efforts to “protect the small businesses”, have reverted to a method of “taxing the rich to feed the poor”. Business owners have become fed up, and unless something happens soon, Americans will suffer even more at their own hands!
Government regulations have become increasingly outrageous. You must now buy permits for garage sales, lemonade stands, and fruit stands! Building permits are required for even small home modifications such as adding a window or door, for adding water heaters, cutting trees, sidewalk café seating, having a flagpole over six feet, or even for making too much noise!
Clearly, government regulation is out of hand, not all government regulation is bad? Americans benefit greatly from many of the health care regulations, and the average American enjoys a standard of living far above that in other countries. In his video, Max Borders complains that the red tape and permits required by the health bureau crushed his cottage business before it could even start. While I am sure that much of the red tape is unnecessary, I am thankful that I can be relatively sure that my food is safe to eat – a luxury that most other countries do not have.
So, is government regulation entirely bad? No. Businesses should be regulated with moderation – for the purpose of protection rather than taxation – but the government should not regulate every aspect of private enterprise.