What six years of Barack Obama's economic incompetence has wrought

Now that Barack Obama’s first six years are over it might be nice to see what he has wrought, and compare him to another iconic president, Ronald Reagan.

When Barack Obama took office in 2009 65.7% of Americans were participating in the laborforce. (This is called the Labor Force Participation Rate – LFPR – which includes those working and those looking for work.) Six years later that number was down to 62.8. When Ronald Reagan took office in 1981 63.9% of Americans were participating in the workforce and six years later that number had grown to 65.6%.

Unemployment is the measure of those in the laborforce looking for work but can’t find it. At first blush Obama seems to be doing well using that measure. In February 2009 unemployment sat at 8.3% and by November 2014 it had dropped to 5.8%. In February 1981 Ronald Reagan took office with an unemployment rate of 7.4%, which by November 1986 had only dropped to 6.9%. Using the unemployment measure seems to suggest Obama’s policies trump those of Reagan.

Upon closer inspection however… not so much. The LFPR tells the story – or really its inverse does. That is the number of those not working who must be supported by workers, unless they were independently wealthy. A 65% LFPR indicates that 35% of the population would be supported by workers. In the case of both Obama and Reagan the US population grew by approximately 11 million people over their first six years in office. Under Reagan, because job growth was so strong – 11 million new jobs – the total number of people who needed to be supported by those working (unemployed + those not in the workforce) remained steady at 93 million throughout those six years. Under Obama however, because job growth was so anemic – 3 million total new jobs – the number of people who needed to be supported by those working actually jumped 8 million from 121 million to 129 million. That means that under Reagan the number of workers in the US grew by 11 million while the number of non workers remained steady. Under Obama the number of workers grew by 3 million while the number not working grew by 8 million.

But some might argue that Obama faced a tougher economic situation than did Reagan. Not really.

When Ronald Reagan took office inflation was 10.1% and six years later it was 1.9% while under Barack Obama inflation started out near zero and has remained there throughout his terms. What’s ironic about this tame inflation is that it has much to do with dropping prices for things like big screen TV’s, mobile phones and oil, – the latter despite Obama’s best efforts – while core items that the poor spend most heavily on such as meats, poultry, fish, eggs and electricity, are hitting all time record highs.

When Reagan took office interest rates were 19.5% and by his sixth year they were down to 7.5%. When Barack Obama took office interest rates were at 3.25% and have essentially stayed in that area since. That extraordinarily low rate is in large part due to the Fed’s pumping of $4.5 trillion into the American economy since 2008, allowing the federal government to borrow like a drunken sailor.

Of course that pumping also has the impact of juicing the GDP numbers as there is more borrowing and investment going on than the fundamentals would otherwise support. And it’s in this easy money environment that Barack Obama’s biggest failure can be seen. In the six years he’s been president GDP grew by a total of 22%. Compare that to the same period under Reagan, where GDP grew by a whopping 42%. Of course Reagan did add substantially to the national debt, growing it by 6% of GDP during each of his first six years. But Obama borrowed even more, growing the national debt by 8% of GDP each of his first six years. Add to that the 5% the Fed kicked in each year with its Quantative Easing and it’s almost impossible understand how GDP could grow as slowly as it has under Obama.

The key however is hiding right in plain sight. Q4 GDP numbers give it away. The administration crows that the economy grew at a 5% clip in the last quarter of 2014. Not bad. What they don’t tell you is that fully half that uptick came specifically as a result of coerced Obamacare spending. Obamacare is a microcosm of what’s wrong with Obama and his administration. On the one hand it kills jobs, increases prices, eliminates choices and puts private practice doctors out of business. On the other hand, those very same regulations force Americans and companies to spend more on its mandates, which has the result of juicing GDP. So by regulatory fiat the government can remake the economy and claim Americans are better off in the process by juicing GDP numbers. Now imagine the same thing with hundreds of thousands of regulations over the last six years and you understand just how it’s the case that GDP seems to keep growing but Americans seem poorer.

To put the cherry on top of this indictment of Barack Obama’s economic incompetence is a quote from Ronald Reagan: “Welfare’s purpose should be to eliminate, as far as possible, the need for its own existence”. Barack Obama likely disagrees. When he took office there were 32 million Americans on food stamps. Today that number stands at 46 million. In six years Barack Obama’s economic policies have so damaged the country that 5% of Americans have been added to the food stamp rolls while fully one third of the country receives some form of welfare. All of this while the rich are paying more in taxes than ever and half the country pays no income taxes at all and the middle class try to keep their heads above water.  That's what happens when your policies bring about the slowest economic recovery in the last half century. 

Too bad no one saw this coming…

Jan 1 welcomes 40,000 new laws! Maybe it's time for a different kind of New Year's resolution...

One of the great places to observe the successes of New Year’s resolutions is at the gym. January invariably sees the place packed with new people in their new workout clothes looking at the sea of machines trying to figure out what machine does what and you use them. By March the scene is much different in that a majority of those newbies have fallen off their path to fitness while those remaining have figured out which machines they like and what routines keep them going.

The beauty of New Year’s resolutions is that whatever your hubris at the end of the year – “I’m going to lose 50 pounds by summer” or “I’m going to read one book a month” or “I’m going to watch less TV” you can reconsider it with little consequence and change your behavior accordingly. In another words, New Year’s resolutions can be short-lived or enduring, you get to decide which, based on your goals, objectives and willingness to do the work.

Unfortunately, such is not the case for laws. Unlike New Year’s resolutions, which will leave you with little more than a bruised ego if they don’t work out, laws can leave you with less money and less freedom and you can’t just shrug your shoulders if they don’t work out.

Across America the New Year rings in its annual christening of new laws. From California students getting to decide for themselves which bathrooms they want to use to Rhode Island employers no longer being able to ask prospective employees about a criminal past, there are 40,000 new laws and regulations that will be added to the millions that Americans already have to navigate through. And unlike resolutions that can wither in the face of reality, laws rarely, if ever, are rescinded, and once they are on the books they can be used as tools of intimidation by government regulators to pretty much do whatever they want. And what they want is control, regardless of what it costs you.

Take as an example a recent interaction between the FDA and a company called 23 And Me. 23AndMe marketed a $99 genetic test where customers would send in a swab with their DNA on it and the company would return to them a detailed ancestry report and personalized information on 248 genetic traits and health conditions. Basically the company would analyze your DNA and give you a report of what it says about your health, at a genetic level. Do with it what you like, but that’s what the data says… And that’s the problem. Apparently the FDA doesn’t think you are smart enough to make informed decisions about your own health. As such, they pervert a 1938 law that gives them the right to regulate “medical devices” to basically put the company out of business. Essentially you’re not allowed to find out about a predisposition for cancer or liver disease because the FDA worries that some people might do the wrong thing with their info. So basically, to protect doctors from competition, and to keep citizens from becoming more informed about their own bodies, the FDA has decided to try and put the genie of DNA testing back in the bottle.

Of course it won’t be able to. If 23AndMe doesn’t move to the Bahamas and set up shop, someone else will. Regulation cannot stop technology. Nor can it cannot guarantee fairness. Numerous jurisdictions around the country, and Washington itself, are debating raising the minimum wage in order to provide “a living wage” or “fairness” to fast food and other service workers. Such regulations will of course fail at both counts. Not because they can’t raise the amount employers must pay, but rather they will simply drive employers to use more technology in their businesses. Today standalone computers can take your order while robots can assemble burgers and sandwiches. Regulation can raise wages, but it can’t bring about “fairness” or the government mandated Nirvana that regulators seem to endlessly pursue. How much good does a higher minimum wage do someone if there are fewer jobs to be had as a result?

At the end of the day, the New Year ringing in 40,000 new regulations should not be a cause for celebration. It should be a clarion call for a nationwide resolution to stop looking to regulation as the solution for every problem and to go on a national diet where instead of lbs we shed – or shred – a majority of the laws and regulations that are already on the books already. It might not improve our waistlines or cardio performance, but it will do wonders for individual freedom and the prosperity of the nation.

A Little Sugar Coating and Bit of Demagogy is a Recipe for National Suicide by Regulation

One of the most odious aspects of regulation is the fact that it usually comes in a sugar coated package. Typically they are the result of a law that is intended to “help” everyone or “protect” some group or to give an advantage to a group whose members are perceived to be disadvantaged.

It’s that sugar coating that makes regulations so difficult to challenge. If you oppose pouring more money into a failed school system you “Don’t care about the children”. If you oppose solar power funding or excessive energy regulation, you “Don’t care about the environment”. If you oppose a minimum wage increase you are a shill for big business and “Don’t care about workers” and if you oppose Obamacare you don’t care about the poor and you’re racist to boot.

Of course once those regulations are in place, once they’re on the books, they almost never come off. Regardless of their ineffectualness in actually solving whatever problem they were theoretically supposed to solve, or despite their actually making the problem worse, the answer is almost never to repeal the law and send the staff out into the world to find jobs in the private sector. Instead the solution is almost invariably more laws or regulations to try and patch over the “minor” problems with the first law or regulations.

The Head Start program is a perfect example of this problem. Started during the heady progressive days of LBJ as part of his “War on Poverty” the program has been a consistent failure, showing no material benefits, yet it still exists. Not only that, its supporters continue to push for increased funding for the program. But it can’t be killed “because of the children”. Of course, that is just one of the thousands of programs costing hundreds of billions of dollars each year that were put in place to stamp out poverty. Yet, somehow, despite the distinctly changing nature of the definition of poverty, there remain more people characterized as living in poverty in the US today than at any point in our history.

Another aspect of this tyranny of regulations is the fact that that sugar coating is usually delivered via a bullhorn. Whether its teachers unions striking for more education spending or the SEIU picketing for the right to organize virtually anyone who still has a job to illegal immigrants demanding amnesty to the Democrats and the media conspiring to convince the country that the GOP wants to throw grandma off a cliff, the facts about the costs and consequences of regulations are rarely ever discussed. It’s hard to carry on a fruitful discussion when one side simply shouts platitudes and refuses examine the actual causes of the problems. If throwing money at education were the solution, the United States would have the smartest kids on the planet… Alas we don’t. If the only choice is between throwing grandma off a cliff and spending more money on a Social Security system that will crumble at some point in the future… everyone will want to save grandma.

There are few issues in life that whose salient points can be easily captured on a picket sign. Of those, none are solved by government legislation or regulation. Much to America’s shame that fact apparently doesn’t matter. “What do we want... (Insert relevant liberal trope here)” “When do we want it... NOW!”

It’s no wonder that virtually everyone in America knows the name of Al Sharpton and Jessie Jackson but few know Jenny Beth Martin or Thomas Sowell. Sharpton and Jackson are snake oil salesmen with no interest in actually solving problems other than how to increase their media exposure while Martin seeks to solve the country’s problems by shrinking a dysfunctional government and Sowell, as the most lucid and articulate economist in America, simply explains the world as it really is and lets the reader choose their path to solving problems.

Finally there is the single most pernicious aspect of this sugar coated world of laws and regulation: Control. More regulations provide politicians and government bureaucrats with ever more opportunities to persecute those they don’t like and benefit those they do. Not sure about that? Just ask the conservative groups who were targeted by the IRS. How about Gibson Guitars or the insurance companies who criticized Obamacare in 2010. On the other side of the ledger are the green energy companies who’ve just been given carte blanche kill Golden Eagles, illegal immigrants the President has decided not to deport or “community organizing” groups the Justice Department is forcing banks to fund. Not to mention the various unconstitutional delays and waivers President Obama has handed out relating to Obamacare. And those are just federal laws, of which there are tens of thousands. There are hundreds of thousands more at the state and local level. When laws can be implemented arbitrarily the rule of law is gone.

Obamacare is the perfect example of legislation which was sold with sugar coating and whose opponents were pilloried as racists or who didn’t care about the poor. Today, simply because Obamacare was so overarching and so spectacularly dysfunctional, Americans are beginning to see that more laws can’t make everything better. Indeed some are even starting to understand that government action can and often does make things worse. The problem is however that most legislation is not of the supernova sort, but of the rather pedestrian sort that is passed and simply blends into the disordered order of the universe of regulations we’re expected to obey. Eventually the stars of regulation will become too numerous and will block out the dark matter in between them, i.e. the freedom upon which America was founded. At that point we will become a nation where every move, every step, every thought are regulated by the state. We are not quite there, but we’ve seen the future and it is North Korea. When we finally get there we’ll wonder what how we got there because all of the “solutions” we were swallowing tasted so sweet.

Regulation vs. Prosperity... America goes gently into that good night

Thanks to the Founding Fathers, in 2013 the United States has built the wealthiest nation in history on free markets and the rule of law. (And thanks to their more recent successors, we’re simultaneously the poorest… but that’s another discussion.) While the Founding Fathers were remarkable for much, what is perhaps their greatest legacy is their recognition that Americans, like all men, are imperfect.

In 1787 after almost a decade of the greatly flawed Articles of Confederation, the 2nd Continental Congress was formed and would eventually produce the Constitution we have today. What was so amazing about the document was the fact that it had built into a wide variety of it limitations and strictures intended to both delineate and restrict power. The overarching idea that powered the construct of the Constitution was the fact that an unfettered government would become tyrannical. The founders understood that limited government was supposed to act only in those areas that citizens could not on their own – think national defense, courts, treaties – and, importantly, only based on the powers granted to it under the Constitution.

Fast forward to today where their work has proven itself well placed with a prodigious American prosperity been built on its foundations of free markets and the rule of law. More than any nation in history, we have benefited from the fact that virtually any American citizen or resident has had the opportunity to start a business. Sometimes they invest their money in a neighbor’s plan to start a sandwich shop and other times they roll up their sleeves and start something on their own. More than anything in the world, that freedom of opportunity has set America up for success and driven us to achieve the greatest level of wealth ever created.

Unfortunately, that freedom of opportunity is rapidly disappearing… In an effort to ameliorate every problem that might befall a citizen, the federal government has passed laws and created regulations that touch virtually every aspect of our lives. This Sisyphean exercise has not only failed, but it has laid the foundation for the undermining of the freedom and opportunity that made America the wealthiest nation in the world.

Economic growth comes largely from small businesses. 70% of all new jobs come from small businesses. Small businesses are where innovation begins. Think about it. You’re probably not surprised that the PC revolution was not driven by the behemoth IBM but rather by two upstart companies named Apple and Microsoft. You’d probably not be surprised to discover that ESPN was founded by an unemployed sportscaster rather than one of the three major networks. You’re also probably not surprised that it was Google, a company started by two college students, that figured out how to effectively harness the opportunity in online advertising while America’s mega media companies stumbled from one failed business model to the next. Big companies always start out as small ones.

Small business is where new ideas get to play themselves out and figure out what works. This is because small companies are typically nimble, they don’t have legacy products or services they are concerned with undermining, and perhaps most importantly, owners and investors are usually very close to the action. They normally are right in the mix of where everything is happening so they can observe and react quickly to the needs of markets. Big lumbering, billion dollar companies with tens of thousands of employees and multiple levels of hierarchy rarely have the insights or quickness to see opportunities ahead.

And of course starting a business is risky. You never know if customers are going to like your product or service. Suppliers can be unyielding in their financial terms. Employees can be fickle and unreliable. Competitors abound. And of course it can be incredibly expensive. Nonetheless, some intrepid Americans do venture forth to hang out their shingle and pursue the dream of turning an idea into a flourishing business. They might get rich, but they might go broke too… but to them it’s worth the risk.

And as if it were not hard enough to find success as a small business, it’s becoming far more difficult in one respect that the entrepreneur has very little control over: Regulation.

The nearby chart shows the growth in federal regulations over the last 60 years. That growth is set against a GDP growth chart for the same period – measured by average rate of growth over the decade. The correlation is crystal clear, and painful to behold.

Each page of the Federal Register represents dozens of byzantine regulations that must be administered by millions of bureaucrats, often with draconian consequences for violations. For small businesses such regulations are nothing short of a nightmare. Not only do they have to navigate the equally challenging state and local government regulations, but they must increasingly deal with mandates crafted in Washington by bureaucrats who are professional pencil pushers with no experience in actually running a business, nevermind an awareness of the unique challenges faced by small businesses.

The Federal Register is the catalog of all federal regulations. In the 1950's it would see an average of 10,400 pages per year published.  During the decade the US economy grew at an average rate of 4.2% a year (inflation adjusted). In the 60's it would see 16,800 pages per year on average while GDP would average 4.44% growth per year. That was the last decade of treading water. By the 70's Register pages would be 48,000 per year GDP growth dropped to an average of 3.75% per year. The first decade of the new millenia there would be 77,000 pages published per year and as one might expect, the decade’s growth was an anemic 1.73% per year on average.

As regulation has increased GDP growth has decreased. That is no coincidence. Perhaps the greatest way regulation cuts growth and hinders prosperity is that it smothers small businesses and benefits large ones. Unlike big businesses, small businesses can’t generally afford lobbyists to influence legislation nor armies of lawyers and accountants to figure out how to minimize its impact. The result is less innovation, fewer jobs and at the end of the day, smaller GDP growth and less prosperity.

And if you think this discussion of the correlation between GDP and regulation is just a game of semantics, think about it this way. Take your income… How would you like to double it? At the 4.4% average annual growth rate the experienced in the 1960’s, it would take you 16 years to double it. Not quick, but not horrible. At the 1.7% rate experienced during the first decade of the 21st century, it would take you 41.6 years. And that’s not an anomaly, it’s 50 year trend. More regulation means less growth, which means less prosperity.

With the regulations spawned by Obamacare only now making their way onto the books we can expect even more slowing to come. This is not a Democrat vs. Republican issue… this is a conservative vs. liberal issue. As the liberal progressives have sought to use the force of government to create a perfect world where everyone lives in a state of bliss unencumbered by the sometimes harsh vagaries of life and protected from the consequences of choices, they have in fact destroyed the fount from which emerged the American prosperity that allowed them to focus on frivolous things in the first place. Here’s an analogy: In order to guarantee every passenger is comfortable and that a plane could never crash, liberals have loaded the plane up with so many pillows and so much safety equipment that it can’t get off of the ground in the first place. As anyone stranded on the tarmac for seven hours inside a JetBlue plane could probably tell you it doesn’t take long for dystopian conditions to begin to emerge.

Just as aerodynamics of flight can’t support a plane that can’t get off the ground, free market economics can’t drive an economy that is so constricted by regulation that it can no longer be called a free market in the first place. Welcome the America of the 21st century, where prosperity becomes but a distant memory and a once great people go gently into that good night…

Barackalypse Now, the story of one man's destruction of the American Dream

By now you have figured out that Armageddon did not occur on Friday and the dire warnings from the White House that the nation would essentially collapse were, shall we say, somewhat overstated.

That doesn’t mean however that the nation and American prosperity is in any less danger. Barackalypse Now is indeed upon us, and it has nothing to do with the Sequester. It has everything to do with the deranged economic policies of the Obama administration.

Virtually every American would like to be a little better off tomorrow than he or she is today. It makes no difference whether they are rich or poor, or whether they are happy with their current circumstances. Most of us would simply like to be a little better off next year and the years after than we are today.  Most of us don't mind working to make that a reality, but the question is, how we can accomplish it.

One way many people have chosen to pursue the American Dream has been to start their own businesses. The goal of entrepreneurs is often a mix of trying to become wealthy and doing something about which they are passionate. Every single company you know the name of or have interacted with started out at some point as just an idea that someone sought to do something with. Two such companies are Subway, the largest sub sandwich restaurant chain in the world and Home Depot, America’s largest home improvement chain. Both have thousands of locations, do billions of dollars a year in revenue and employ hundreds of thousands of people. Both companies started out with one unit each and grew into the 800 lb gorillas they are today. Interestingly, the founders of both companies say that if they started their companies today they could never have succeeded. And it has nothing to do with the recession, indeed Home Depot was founded in 1978 in the midst of the worst economic recession since the Great Depression.

Both founders cite government regulations for the reason that they could not succeed. Fred Deluca, the founder of Subway says:

It's continuously gotten worse because there's more and more regulations and it's tougher for people to get into business, especially a small business. I tell you, if I started Subway today, Subway would not exist, because I had an easy time of it in the '60s when I started and I just see a continuous increase in regulation.

Bernie Marcus, co-founder of Home Depot says this when asked why more businesses don’t complain about the regulatory burdens:

They are frightened to death — frightened that they will have the IRS or SEC on them. In my 50 years in business, I have never seen executives of major companies who were more intimidated by an administration.

Although overregulation has been getting worse for decades, the Obama administration has put the regulatory apparatus on steroids and uses the coercive power of government to intimidate businesses into submission. The result is that large companies like Home Depot, Subway, Google, Wal-Mart and others can hire armies of lawyers to bring them into compliance or find loopholes through which they can maneuver. Small businesses however, the fount of jobs, with their limited resources and bandwidth simply can’t compete. The result is that big companies get bigger and fewer competitors emerge as success as an entrepreneur becomes less possible.  It’s ironic that the administration that was so quick to embrace Occupy Wall Street’s disdain for big business has actually helped big business by suppressing potential competitors.

Another way Americans seek to improve their lives is to find a good paying job. Here too the Obama administration has punched the average American in the solar plexus. Perhaps no single regulation has had more negative impact on jobs in the economy than has Obamacare. The regulations are not yet fully implemented but they are already causing a disaster in job creation. Across the country employers are shifting employees from full time (defined as 30 hours or more a week) to part time status so that they can avoid the taxes associated with Obamacare. The result is that fewer people will have full time jobs and must take two or three part time jobs to make what they would have at one full time job. That is the definition of inefficiency. From a quality of life perspective Obamacare is going to result in parents spending more time out of the house as they work their two six hour jobs with two hours in between or they work seven days to earn a full time equivalent paycheck. Even without families, everyone is going to have less leisure time to do everything from go to restaurants, the movies, the beach, play sports, read books or whatever it is they love to do.   The small businesses lose out as well. While they may avoid paying the Obamacare taxes for a while, they now have to provide the training, scheduling, management and administration support for more employees than they would if they could fill their jobs with full time employees.  Obamacare is a job killing machine, and with it goes the dreams of millions of Americans who were hoping that a job would help them achieve their life's goals.  

With a flawed government focused mindset, his administration has already accomplished what Barack Obama suggested it would take two terms to finish: “Fundamentally transforming the United States of America”. Unfortunately for those seeking to pursue the American Dream, the Barackalypse he has created has little resemblance to the dynamic America whose engine drove our own and the world’s prosperity for a century. At some point in the future when anthropologists discover the ruins of what was once America they will wonder what kind of Apocalypse could have destroyed such a great and powerful nation. One wonders what curious artifacts will remain that indicate the damage was self inflicted when the citizens twice elevated to their presidency a self aggrandizing man with no understanding of how the world actually works beyond the chimerical fantasy created in his mind and perpetuated by a cabal of empowering sycophants. Perhaps the story the write will be "Barackalypse Now, the story of one man's destruction of the American Dream".  

Maybe it’s time to drop the picket signs and pick up a copy of The Road to Serfdom

It was with great interest that I watched Facebook catch fire with support of the calls for picketing and sick-outs at Wal-Mart stores across the country on Black Friday. From what I could tell, most of those supporting the calls were liberals who attacked the company with claims that it doesn’t pay “a living wage”, “exploits” its workers, or owes its workers health care. I even saw one fantastical claim that a majority of Wal-Mart employees are on food stamps. The suggestion was that Wal-Mart should be forced (via government itself or indirectly via unions) to change completely how it deals with its employees in terms of salary and benefits.

To set the record straight, according to Business Insider, Wal-Mart pays its workers an average of $11.75 per hour, just slightly below retail’s national average of $12.04 and well above the federal minimum wage of $7.25. The company itself states that the average non-manager employee earns between $10 & $12 per hour.

Those wages are at least sufficient to make Wal-Mart the largest employer in the country, with a current headcount of over 1.4 million employees. And no one forced those employees to take those jobs. One of the beauties of freedom is that employees are free to work at Wal-Mart or they can take their labor and sell it to someone else… or better yet, they could start their own businesses.

I couldn’t help but think back to the nonsensical Occupy Wall Street protests of a year ago. Many of the participants were carrying around signs decrying Wall Street for its profit mongering and the harm big businesses were inflicting on small businesses and the little guy. Of course their solution of choice was more regulation. Naturally.

Both of these instances reveal more about the protesters than it does about the companies being pilloried. The very regulations they seek are one of the reasons big businesses are so successful verses small businesses in the first place.

It’s a simple example of liberals either not knowing or ignoring basic economics. Take economies of scale. One of its benefits is that you can spread fixed costs out over a larger volume. It works for rent as well as for regulations. Let’s imagine there are two widget stores operating next to one another with identical rents of $10,000 per month. With everything else being equal, the store selling 2,000 widgets a month can build a $5 cost per widget into his prices, whereas the store selling only 1,000 widgets per month has to build in a rent cost of $10 per widget. As such, the store selling more widgets will likely be more profitable, successful and eventually may be able to buy out the second widget store and start its journey to becoming a hated big business.

The same holds true for regulations. Frequently large businesses not only influence regulations to their benefit, but they can also absorb the costs of such regulations far more easily than can their smaller brethren, even if they were unable to influence their writing. Take the tax code for example. At 75,000 pages, a five billion dollar company can easily afford to hire a phalanx of lawyers to find ways to reduce its taxes or lobby for changes. Such luxuries are rarely feasible for small businesses.

According to the Small Business Administration, big businesses with more than 500 employees pay about $7,755 per employee to comply with federal rules each year, while small businesses with fewer than 20 employees pay $10,585 per employee. That is almost 50% more that small businesses have to pay per employee than do large businesses. All because of regulation.

This push for regulation is simply another example of the left using the cover of populism to disguise its real agenda: more government control over business. Whether using the fig leaf of environmentalism to further the nonsensical, inflation causing ethanol mandates or the lie of “the rich don’t pay their fair share” to push for higher taxes, the left rarely lets facts get in the way of their pursuit of a socialist, statist agenda.

Which brings us back to the Wal-Mart protests of Black Friday. The real goal of liberals is not to improve the lot of Wal-Mart employees, it’s control of the company via unions and their government enablers. In doing so they would be able to use government regulations to not only take money out of the pockets of Wal-Mart workers, but more ominously, they could harness the power of the NLRB to impose a wide range of costs, controls and dictates on the company.

To put a cherry on top, take Wal-Mart’s misguided and calculating support of Obamacare – calculating that it would impose greater costs on its small competitors – that has now resulted in the company itself dropping healthcare coverage for many employees while drastically raising the premium costs for others. By pushing such utopian, economically illiterate regulations as Obamacare, the Community Reinvestment Act, ethanol mandates and higher taxes for the rich, liberals not only fail in their stated objectives, but they also invite a wide range of unintended consequences, none of which ever seem to be good. Maybe it’s time to drop the picket signs and pick up a copy of The Road to Serfdom.

What we can learn from Thomas Jefferson and Star Trek... a recipe for limited government

How many people marry the first person they ever kiss or date or even have sex with? Not that many. The average age an American loses their virginity is 17 while the average age they get married is 27. Nonetheless, despite a decade in the dating pool, experiencing everything from one night stands to years of living with someone, when people finally take the plunge, half of all marriages end up in divorce.

There are lots of things that one might take from that observation, but the thing that is most compelling is that despite their best efforts, people are not perfect. They make mistakes. After spending the first 10 years of their adult lives trying to get it right for what is arguably the most important decision of their lives, half the population still gets it wrong and asks for a “do over”. Despite all efforts to make a good decision, half the time we get it wrong. And that’s with everyone involved seeking a common goal!

So the question is: If, with everyone involved seeking to do what’s in their and their partner’s best interests, we get it wrong half the time, how often does government, with its myriad players involved, many promoting conflicting, even mutually exclusive positions, get things wrong? No doubt far more often that individuals earnestly seeking a lifetime of happiness.

Unfortunately with government, unlike marriage, rarely, even in the face of abject failure, does a law or regulation get thrown out. Once a law is on the books, they almost never come off regardless of their cost or efficacy. Of course if it were only a few laws there wouldn’t be much of a problem. It’s not a few. In terms of actual federal laws, today there are somewhere in excess of 20,000 on the books. That is nothing when compared with the regulations those laws have spawned.

The Code of Federal Regulations is the list of all of the regulations of the United States – which are based on the bills passed by Congress and signed into law by the President. Today the Code contains over 150,000 pages of regulations. And those regulations are growing fast. In 1970, 183 years after the Constitution was ratified, the Code contained 53,000 pages. Today, a mere 40 years later we’ve actually added 100,000 more. And the pace is actually increasing and becoming more onerous.

If these regulations had little impact on our lives it wouldn’t matter if there were millions of them. Unfortunately their impact is anything but little. Federal regulations alone (and there are lots more laws at the local level) cost Americans over $1 trillion per year, or approximately 7% of our GDP and more than we actually pay in income taxes. And those are just the direct impact costs. Imagine how many companies are never started, how many would be entrepreneurs settle for secure government jobs, or how many companies fail because of the phalanx of federal regulations? No doubt the number is huge.

This leviathan of government regulation is made all the more worse because it has spawned an army of millions of federal government employees and lobbyists, none of whom wants to put themselves out of work. The intractable problem of government growth and increasing regulation will not solve itself. It’s going to take brute Constitutional force.

A Constitutional Amendment should be passed that states that all federal laws have an implicit sunset provision of 10 years unless it passes each house of Congress by at least 60%. It would also stipulate that all federal regulations would sunset after 10 years, regardless of the margin of passage of the underlying law. The effect of this Amendment would be a greatly diminished the number of zombie like federal regulations that never die, regardless of their cost, efficacy or unintended consequences. Each sub 60% law would have to be re-authorized each decade.

The most obvious impact of this change would be that politicians and bureaucrats would no longer be able to spin yarns about milk and honey without any accountability. At the time of reconsideration, each sub 60% bill (or every regulation) would have a decade’s worth of hard data to analyze, making it far more difficult to hoodwink the public with rosy scenarios that have no basis in reality. The beauty of this proposal is that it would force legislators and regulators to defend a law’s actual results rather than opine on its promised virtues. Given that most government programs cost more than projected, rarely work as promised, and often have significant unintended consequences, a decade should be a long enough time to inflict any law or regulation on the country and her citizens.

This proposed Amendment would apply to all existing laws and regulations, giving each 10 years from the day of ratification before it expired. The result of this would be immediate and twofold: It would dramatically slow the growth of government and regulations while simultaneously beginning to make government more efficient. By forcing politicians and bureaucrats to focus on defending their existing laws and regulations (AKA power) it would immediately diminish their incentive to create new programs. At the same time, given that politicians and bureaucrats would have to argue against a law’s or a regulation’s actual consequences rather than it’s promised benefits, it would force them to focus their attention on producing demonstratively positive results rather than just spending more money or accumulating more power.

In the Omega Glory episode of Star Trek Captain Kirk and company come upon a planet where the inhabitants are speaking the garbled versions of the words of the Pledge of Allegiance. The people don’t know the actual words or even what they mean but do so because that was what has survived through the generations. In a similar way, when laws and regulations (and the bureaucracy they spawn) calcify and become completely detached from the original goal for which they were established, they cease to be proper tools of government and instead become simply another instrument of government power and coercion. By putting in place a mechanism for objectively evaluating the success or failure of government actions in relation to the problems they were intended to address, this Amendment would both demand real accountability on the part of government as well as give citizens a reason to remain engaged in its workings.

I can think of no better mechanism for putting Thomas Jefferson’s words into action:

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.