I had a conversation with a successful businessman in Tyler and he gave me a mind-boggling statistic. He’s building a new warehouse on his existing property and he told me that 43 percent of the money he is spending in order to get the building he needs is being spent complying with the demands of various entities of the government.
“That seems high,” I said, “but you have to meet code. You have to use flame retardant materials and you have to install the electrical and plumbing a certain way. Isn’t that just the cost of doing business?”
No, he quickly informed me. The 43 percent that he is talking about is money that is being spent on things that in all of the planning and cost estimating that was done prior to undertaking the project, he did not know and could not imagine that he would have to spend.
He proceeded to show me examples. And sparing you the details and keeping this man’s business private, suffice to say that what he is experiencing is regulators and bureaucrats, arbitrarily and with stunning capriciousness, exercising their authority to act as gatekeepers to any capital project that attracts their attention. It is quite literally and demonstrably true that in a number of very expensive instances attendant to this man’s project, the bureaucrats are making up the rules as they go along. They are demanding modifications at great expense that do not contribute in any tangible way to the safety, efficiency or environmental-friendliness of the building and cannot be reasonably anticipated and planned for by reading the applicable regulations.
When I asked, “Why are they making you do all of this?,” the answer was simply, “Because they can.”
And this is happening in Texas, the supposedly business-friendly state. Imagine what this man would face in New York or California.
Certainly, buildings built today are better, more energy efficient, safer and more fire-resistant than they were a generation ago. But I submit that when meeting the demands of the regulatory apparatus eats nearly half the money in a capital project, it is clearly evident that government is too large, too intrusive and has become dangerously parasitic.
Politicians talk about creating jobs. But guys like the man in this story are the only ones who can actually hire someone. With this mugging fresh in his mind, how enthusiastically do you think he will pursue future expansion opportunities?
Little by little over four decades, the American business owner has become Lemuel Gulliver and he finds himself washed up on the government island of Lilliput, imprisoned by an army of Lilliputian bureaucrats, each only six inches tall, but able by the shear force of their numbers to tie him down and hold him against his will.
This is not how America became the strongest, freest and most successful nation in all of history. We did not regulate ourselves to success. We built ourselves to success. When America was on the rise, government’s role was to create a clear, understandable set of rules and to enforce those rules fairly and predictably on all comers. And they came.
Today in America, to an astonishing degree, tens of thousands of cosseted and unaccountable bureaucrats, all safely beyond the reach of those we elect at the ballot box, have become the determinants of economic activity.
In this election year as we consider politics on a national scale, try this mental exercise close to home. Ask yourself, how many times in the past five years a meeting has been held by the staff – not the city council but the permanent staff – at city hall for the purpose of discussing how to make regulatory compliance easier, less expensive, more predictable and more conducive to business expansion than it is now?
For the American economy to ever fully recover, thousands of such meetings are going to have to be held.