marketThis isn’t intended as a political discussion. I am not advocating for or against any particular policy. I am stating my belief that policies stack and have a negative aggregated effect on small start-up companies who have to overcome the entire stack just to begin operations.

Collectively, we want (even need) more start-up companies to provide jobs and job training AND to provide the next generation of successful, growing companies.

I’m wondering to what extent the current white house’s policies of reducing regulation will actually be additive to business starts over the long-haul. Is it possible that the aggregation of great policies that are well designed, well researched and well intentioned could act together as an anchor on business starts and therefore generally reduce economic opportunities?

Obviously, bankers (who are already entrenched) LOVE the idea of reduced banking regulation. Industrialists (who are already established) LOVE the idea of reduced EPA regulation. No doubt their stock prices are reacting positively to the reawakening of animal spirits. What we see playing out in public markets is more the excitement of crony capitalists and is not what I am curious about. I understand this creates future problems – whether it be the bursting of another financial bubble caused by mal-investment or environmental grdisasters caused by poor oversight.

In the context of smaller businesses, a single regulation, minimum wage for example, is probably benign. However, 5 regulations – licensing requirements, minimum wages, minimum parking requirements, requirements for bathrooms on premises, employee work-time limitations – put a larger financial cost on the business and require time and energy for compliance.

The question I have is a simple one… at what point (in terms of number of regulations) do we imagine that a potential business-owner never launches their enterprise? At what number or complexity of regulation does an existing business owner decides against expansion? And is it possible, that the weight of additional financial costs and compliance burdens can cause a currently successful business to fail?

It is easy, I think, to argue for the benefits of a piece of legislation. The minimum wage argument makes complete sense to me.  Tying it to some sort of inflationary adjustment makes sense to me.

And, I think it is incredibly important to understand what the volume of regulation does to both potential and operating businesses – because successful businesses hire people and train employees.

Is there a point where a regulatory burden doesn’t make sense as applied to small start-up companies? If we admit that there is a cost to the regulations, don’t we have to consider whether the cost is worth the benefit?

How do we do this in the aggregate?