If You're Lucky

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During
the latter days of the Soviet Bloc, many people in Eastern Europe
were only able to get badly needed necessities through the black
market. The black market was often the only reliable source for
functional electronics, properly fitting clothes, or agreeable food.
In order to avoid punishment, many merchants needed to "stay
under the radar" of the government watchdogs in order to carry
on business.

Unfortunately,
many businesses in modern America must also "stay under the
radar" in order to remain in business. For the last ten years,
government regulations of business have become so arcane, convoluted
and illogical, that the only wise and cost effective strategy is
to simply avoid attracting attention of any kind. Thousands of new
regulations are promulgated every year, and compliance is becoming
ever more difficult. The only thing that allows for any breathing
room on the part of private industry is the fact that personnel
and resources within the regulatory agencies are limited by budgetary
constraints. Very rarely are regulations eased or removed, so the
average entrepreneur must simply play the odds that he won't end
up on the "to do" list of some government agent.

With the rapid increase in the promulgation of regulations in the
last decade, agencies like the EPA, OSHA, the EEOC, and the IRS
have been unable to come up with the staff to enforce all the new
regulations. As a result, they have been unable to fully create
the army of government agents they would love to let loose on the
American businessman.

Just
imagine a world where the IRS was able to conduct all of the audits
that are allowed by law. Any place that an agent saw even the most
minute potential for squeezing a few bucks out of a taxpayer would
be subject to audit. IRS agents would stop by on a regular business
and have a look at the books anytime the opportunity arose. There
is very little legal protection keeping the IRS at bay. The burden
of proof is largely on the side of the accused. We are protected
by little more than the fact that they simply don't have enough
time and money to cheat everyone out of a little (or a lot) of money.
A similarly horrific fate would await us if other agencies had more
resources as well.

In
1999, when OSHA suggested that they might apply their regulations
to home offices, more than a few eyebrows were raised. OSHA said
not to worry because they simply did not have enough resources to
inspect even a small portion of all the home offices within OSHA's
jurisdiction. More than likely, inspections would be based on random
home audits. Of course, OSHA didn't mention that if someone at the
agency happened not to like someone, they could ruin his business
with impunity. The home office regulation was eventually repealed,
but non-home businesses continue to turn a profit at the pleasure
of OSHA officials. Once again, the entrepreneur's only comfort is
the fact that the OSHA budget simply isn't large enough to destroy
all the businesses they would like to.

The
same can be applied to any other agency whether it is an issue of
"equal employment opportunity" or environmental protection.
The legal leverage that these agencies have is astounding. When
prosecuting an "offender", if one violation doesn't stick,
simply use another one that exists somewhere deep down in the annals
of the Federal Register. After all, ignorance of the law is no excuse.

Creating
new regulations don't really cost much money, but fortunately for
Americans, actually enforcing those regulations costs a lot of money.
Every year, some high ranking official from each of the agencies
goes before the budget committee and begs for a lot of money. In
recent years they have been getting a lot less than they have been
asking for. This is the only check that prevents any unlucky entrepreneur
from becoming a statistic in some Justice Department legal record.
When money is tight, there is still the chance that a lot of people
will be able to "stay under the radar." On the other hand,
any increase in funding would allow these agencies to grow more
tentacles and to extend their reach to more and more remote places
in the American landscape.

It
became apparent during the Reagan administration that once an agency
is here, odds are vanishingly low that it will be gone any time
soon. Reagan was committed to destroying the Department of Education
and to hobbling the Environmental Protection Agency. He failed.
Congress kept sending them money, and all the bureaucrats had to
do was wait a few years until Reagan either lost interest or was
out of office. A president can last four or eight years. It's easy
for a permanent bureaucrat to wait a president out.

In
the end, a potential entrepreneur's only protection from omnipresent
regulatory meddling is the budget constraints of the various agencies.
The entrepreneur can gamble that the odds are low that he will be
fined, harassed, sued, or shut down. If the average entrepreneur
knew that he was going to be checked up on every few days by a government
agent, he would be mad to ever go into business in the first place.
Indeed, to assure compliance with regulations, regular and frequent
visits must be the norm. If regulatory agencies were actually able
to enforce all of their laws, the economy would come to a virtual
standstill. As economist Ludwig Von Mises has pointed out, the more
an enterprise is regulated, the more time and resources it must
devote toward legal compliance and away from profit seeking. Private
enterprise would be reduced to an army of accountants and lawyers
forever trying to understand the laws and to comply with them. This
type of expense would simply price many entrepreneurs out of business.

Even
though, luck may keep the government away, a lot of business owners
are not always so lucky. Confiscated property, levied fines, and
gargantuan legal costs are the fare for those who don't manage to
stay under the government's radar. For the unlucky ones, legal protections
are few, and the laws are many. Those who avoid prosecution have
no one and nothing to thank except chance, and the fact that members
of Congress like to spend taxpayer money on things other than the
bureaucracy. Naturally, the agencies have been kicking and screaming
that they are unable to properly enforce the law due to a lack of
funding. Thank God. If the Soviet regulators had been able to "properly
enforce the law" regarding the black market, most Eastern Europeans
would have spent their days eating salt cod and using toilet paper
with the softness of a pinecone. Since we can find no solace in
the law, let us be glad for the existence of the happy coincidence
that for bureaucrats, there's never quite enough money to go around.

November
30, 2000

Ryan
McMaken is a graduate student in American politics at the University
of Colorado. He edits the Western
Mercury
.

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