Closing the Gap

March 31, 2014

By: Kelly Diamond, Publisher

closing the gapMy mom and I got into a discussion about transportation and manufacturing in the United States as opposed to other countries like China, Malaysia or Singapore.  I came to an interesting realization: we can buy products that were manufactured in a way that is illegal here in the US.  So while we cannot build the same way as China can – because it’s unfair or unsafe or ecologically unfriendly – it’s perfectly fine that we buy the net products that come from that type of manufacturing.

We have to pay a minimum wage in the United States.  China doesn’t.  We have the EPA.  We have the highest corporate tax rate in the world.  We have unions and caps on hours worked and over/double time pay.  We have a lot of bureaucratic hoops, taxes, fees, etc. that ultimately are built into the cost of doing business here in the US.  So while the US can build a widget in a week for $100, China can build 10 widgets in a week for $85. 

I find it hypocritical that while some turn their noses up at the working conditions under which Chinese products are made, they don’t hesitate to accept the savings offered by those same conditions as consumers.  I personally don’t turn my nose up at Chinese work conditions.  They are a means by which to get many out of a far worse level of poverty, the likes of which Americans might only read about but rarely have the guts to see for themselves.  And I’m perfectly happy to buy the best I can get for my money!  I’m not loyal to a brand any more than I am loyal to the geography in which it was manufactured: if I can get what I want or need for less I will do it.

Deregulated conditions allow people to prosper.  It allows more competitors into the marketplace, and ultimately means better, less expensive choices for the consumer (i.e. YOU). 

While people cry about income inequality and the gap between rich and poor widening, what many fail to consider is, regulations typically favor the rich and established, and rarely help the little guy.  Here are two such examples:

  1. Cottage Laws.  In the past few years, the success story of Paula Deen has caught a lot of attention.  She was a single mother, divorcee, who never worked formally a day in her life.  She was a stay-at-home mom.  Well, life is life, so she did the one thing she knew: she cooked.  She prepared sandwiches and meals and wheeled them through businesses.  She prepared them in her home, sold them from a cart, and supported herself and her children.At that time, there was no regulation that would prevent her from doing just that: solving her financial situation with a little innovation and talent.  Had that happened to her today, she’d not be the success story she is.With the requirement for business licenses, various other licenses depending on the state, and the commercial requirements necessary to sell food, it’s damn near impossible for a poor single mom to ever enter into such a market!Recently, states have adopted what are called “cottage laws”, meaning individuals can prepare and generate a certain amount of food products and revenues respectively from their homes and through direct sales.  In some states, that means you cannot sell at a farmers’ market, in other states it does not.  In all situations, so long as you are not earning over a certain amount, you don’t need to have a commercial kitchen nor do you need to have it inspected.This reduces the burden on the shop owner, while allowing entrepreneurs to enter the market.  Still, there are the cases of lemonade stands being shut down for not obtaining a certain license from the local municipalities, or the little girl’s cupcake business being shut down by the county for lacking the proper permits.  So while individuals of all ages are attempting to earn for themselves, it would seem the government can swoop in and put an end to all that entrepreneurial nonsense!  That little girl was using her cupcake business, along with other little side businesses she was running, to save up for her own car.Of course we can also see this with food trucks who try to compete with their brick-n-mortar counterparts.  The requirements for operating a food truck in some bigger cities are so overbearing, it ceases to be the economical alternative to getting a fixed brick-and-mortar establishment when the regulations become prohibitive and favor one class of market participants over another.  I mean, can you really make a case for “safety” that food trucks NOT be allowed to operate within a certain distance of brick-and-mortar competitors.  You can open a restaurant next to another, but you can’t run your food truck next to a restaurant in a building. 
  2. Transportation.  The Institute for Justice has countless cases of people of little means, trying to start a business of either chauffeuring or taxiing of some sort.  It only requires a vehicle and a licensed driver.  Not a huge barrier to entry right?  Well, in Austin, Texas some entrepreneurs in a lively college town connected some dots and realized there was a void to fill.College students like to party, and they rarely are in any condition to drive at last-call.  College students are operating on a budget, and would rather spend their money on beer, than a ride.  College students often have to draw straws when it comes to WHO will be the designated driver… a job most don’t want because they want to indulge in the festivities as well.What if, someone created a ride service that only cost $3 door-to-door rather than $10 door-to-door?  Someone did just that.  They are the cheap designated driver that services the demand.  In order the keep the costs low, however, they operate as “agorists” which means they don’t bother with all the permits, insurance, or inspections.  They are just a sober ride that the riders request.If I give a bunch of friends a ride home for free, that’s fine.  If I give a bunch of strangers a ride home for $3, that’s “dangerous”.Fortunately, it’s nearly impossible to arrest someone for operating a transportation service illegally because the response is always, “I’m just driving a bunch of friends, and no money was involved.”  If there’s no money involved, and the people in the car are there voluntarily, then there’s no illegality!While I commend these guys’ for their innovation, and their equally creative ways of getting around the law, look at how much a customer can save without all the government involvement.

The reality is, deregulation and reduction of government can do far more to help the less fortunate help themselves than government involvement can.  Deregulation evens the playing field more than regulation ever could. 

  1. If restaurateurs are upset that they have to have certain fixtures that trailers don’t, then the fairest thing to do is eliminate the requirement for those fixtures.
  2. If Americans are indignant that China is getting all their manufacturing jobs because China doesn’t have to abide by the American list of regulations, then the fairest thing to do is lift the burden off the US and allow them to compete on the same level.
  3. If brick and mortar shops are annoyed that online businesses don’t have to charge state sales taxes, then the fair thing to do is eliminate state sales taxes altogether.
  4. If cab drivers are put out by the fact that they have to pay licensing fees while their black market entrepreneurial counterparts don’t, then the fairest thing to do, is eliminate those fees for everyone.

The fair thing is not to burden everyone… it’s to lift the burden off everyone as much as possible.  The TRUE intention of the “commerce clause” in the Constitution was to “regulate commerce”. Not regulate as in impose new rules and laws.  Regulate as in “keep regular”.  The way a laxative keeps your bowels regular: keep the shit flowing rather than congest the system!  (I know, I know… but no one can say I was ambiguous. HA!)

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