Chip Mellor and Dana Berliner report at USA Today that in an economic climate with few jobs and cutbacks on basic city services such as police protection and firefighting, you would think cities and states would be overjoyed when someone was willing to open up a new business, bringing with him jobs, economic vitality and tax revenues. You might think that, but you’d be wrong.
Instead, cities and states stifle new small businesses at every turn, burying them in mounds of paperwork; lengthy, expensive and arbitrary permitting processes; pointless educational requirements for occupations; or even just outright bans. Today, the Institute for Justice released a series of studies documenting government-imposed barriers to entrepreneurship in eight cities. In every city studied, overwhelming regulations destroyed or crippled would-be businesses at a time when they are most needed.
Time and again, these reports document how local bureaucrats believe they should dictate every aspect of a person’s small business. They want to choose who can go into which business, where, what the business should look like, and what signs will be put in the windows. And if that means that businesses fail, or never open, or can operate only illegally, or waste all their money trying to get permits so they have nothing left for actual operations, that’s just too bad. This attitude would be bad enough in prosperous times, but in a period of financial strain and high unemployment, it’s almost suicidally foolish.
A few examples from the article:
In Chicago, Esmeralda Rodriguez tried to open a children’s play center, paying rent month after month while she waited in vain for the government permits she needed to open her business. After a full year of bureaucratic red tape, she finally exhausted her life savings and closed down for good.
In Miami, an accidental loophole in state law allowed jitney van transportation services to flourish briefly. As soon as Miami-Dade County got the opportunity, however, it shut down the new jitneys and ensured no others would open by requiring any new business to prove it wouldn’t hurt its competitors. It even allowed those competitors to object to any new businesses, which is like allowing Burger King to veto the building of a new McDonald’s.
In Newark, several long-term businesses just managed to escape destruction. The city tried to use eminent domain to remove one of the few thriving business areas, but new judicial restrictions on eminent domain put a stop to the city’s plans. Ignatius Paslis was also lucky. Although the city delayed his permits so that his café catering to Rutgers students could not open until after all the students had left for the summer, he managed to survive until the fall, and now his business is thriving.
Philadelphia’s permitting and licensing codes are difficult enough in themselves, but city officials often seem hellbent on treating the system as a perverse game designed to punish honest enterprise. The government required convenience store owner Ramesh Naropanth to put new gates on his store before it would allow him to sell sandwiches, setting the small businessman back $8,000.
Read more at: USA Today