Thursday, September 08, 2011

5 Ways To Improve Regulations But Only Demand Creates Jobs

Even Conservatives know that all of the talk about dismantling regulations, including the EPA’s, is just political opportunism and so do the associations and politicians using it as a “straw man” to rile small business owners, primarily to build membership and get votes.

Effective solutions are almost never “either/or.”

Savvy small business owners, such as thousands with whom I worked  during my now-concluded career in destination marketing, agree with economists who in a Wall Street Journal survey, agreed that the drag on job creation is a “dearth of demand.”

The same held true in an association survey of small businesses last month that ranked government regulation well below “poor sales” as the biggest problem.

Growing small businesses has always been about getting the cash register to ring, not regulations.

Clouding perspective, though, are millions of individuals now masquerading as so-called small businesses but as a scam to deduct expenses off their income taxes.

One, who recently crowed about paying for a new pick-up by deducting hundreds of miles racked up while commuting from his “second home” to where he works in the city of his primary residence.

It reminds me of a story about an FBI agent investigating illegal activity in a North Carolina county who conceded that it would be impossible to find a jury to convict because “people there don’t think it is illegal to rip off the Federal Government.”

I’m sure this sense of entitlement is, in part, behind the rationale of a proposal by moderate Republican presidential candidate Jon Huntsman Jr. to entirely strip away $400 billion in annual loopholes and deductions and corporation welfare.

As Conservative columnist David Brooks reminded Republican leaders last week:

“Job creation was dismal even in the seven years before the recession, when taxes were low and Republicans ran the regulatory agencies.

As economist Michael Spence has argued, nearly all of the job growth over the past 20 years has been in sectors where American workers don’t have to compete with workers overseas.

Meanwhile, middle-class wages have been stagnant for a generation. Inequality is rising, and society is stratifying. Americans are less likely to move in search of opportunity. Social mobility has been flat for decades, and American social mobility is no better than European social mobility.

Some of these problems are exacerbated by government regulations and could be eased if government pulled back. But most of them have nothing to do with government and are related to globalization, an aging society, cultural trends and the nature of technological change.”

President Obama is much more prescient than either extreme with his plan to dramatically streamline regulations announced week before last.  Countering what we’ve come to expect from the negativist echo chamber of '”cut, cut, cut” by Tea Party sycophants, Conservative Brooks reminded us all that:

“It will take an active government to reverse this stagnation — from prenatal and early childhood education straight up through adult technical training and investments in scientific and other research. If government is “inconsequential” in this sphere, then continued American decline is inevitable.”

From my personal experience, here are five ways to streamline and improve regulations but to create jobs, we need to stimulate demand:

  • Prohibit involvement by special interests/lobbyists in the writing of the “rules” for implementing regulations.  Far more than regulators, these interests bully and contaminate the process with unnecessary self-serving technicalities, making the process far more onerous on others.


  • Prohibit legislative bullying and interference with the executive branch.  The stupid things bureaucrats do are more often the result of brow-beating and intimidation and threats from powerful individual law makers.


  • Build performance indicators and accountability into the “rules” so that regulations flex and adjust to achieve the best interests of both the general public and business and this includes speeding up the entire decision-making process.


  • Empower public servants to make on-the-spot, common-sense and practical adjustments to the enforcement of regulations so they make sense and achieves the ultimate objective.


  • Equip and motivate regulators with the ability to explain in easy-to-understand terms the purpose of the regulations.  Eliminate the obfuscation born from a “CYA” culture bred through special interest bullying and self-serving ridicule in the news media based on poor reporting.

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