Too Small To Succeed

       

        We hear a lot about “Too Big To Fail” with the federal government bailing out big banks and companies like General Motors.  I think the term used in the Dodd-Frank Act for large banks is “Systemically Significant”. 

I don’t think the federal government should pick winners or losers, big or small.  Let me tell you a story about a small business. 

I heard this story from a mutual friend that is a very reliable source.  We will call the owner of the business John Doe.  John Doe is an upstanding citizen that was seriously wounded in the Vietnam War.

John built his own business, which we will call the widget business.  Nationally, there were about 400 companies in the widget business.  The federal government recently passed significant legislation regulating the widget business.  These new regulations came from some appointed federal bureaucrat and/or an executive order.  None of these new regulations had the approval of congress. 

The cost for John’s widget business to comply with the new federal regulations was so significant that John considered shutting down his business.  John decided to spend the money to comply with the new regulations.  Maybe he is just a good American that did not want to put all his employees out of work. 

When John’s widget business had it’s final inspection for the new regulations, the federal inspector made an interesting comment.  He said, “Congratulations, we did not think you would be one of the survivors.”  John asked him what he meant.  The response was that the intent of the new regulations was to put 320 of the 400 widget companies out of business, because it is a lot easier for the federal government to control and regulate 80 companies in widget business than 400.

When I heard this, I was immediately mad.  I said John should have gone to the press.  My friend reminded me that if John had done that, he probably would have federal inspectors at his door on Monday morning and he would be out of business. 

This is a sad, but true story.  You now see why I referred to the owner as John Doe and called his business the widget business.

This is not an isolated incident in this country.  Some people are so naive that they don’t think this type of thing can happen in this country. 

Keep in mind this is happening when all political candidates are saying they are concerned with building the economy, reducing unemployment, and helping the middle class.  Actions do speak louder than words.

Historically, when government adds regulations or price controls, small business is hurt.  When small business is hurt, prices increase, unemployment increases, and the economy suffers.  This is not rocket science.  Check out history. 

These continually expanding federal government regulations may not have affected you personally except for higher prices, but they will at some point in time if we don’t make changes.  We better reduce the size and control of the federal government before it is too late.