Death by Regulation

According to a story in the San Bernardino Sun, “Jorge Jr. jumped at the chance to work with his father…but the ports enacted a Clean Trucks program in 2008…That move pushed the cost of buying a truck from $5,000 – $15,000 to …$100,000 for port compliant trucks…” and there nearly ended a small business before it even began.

The American Dream of becoming prosperous is indeed getting harder and the income gap between rich and poor is indeed growing, but not for the reasons the mainstream media keeps pointing out. Paying a CEO more doesn’t leave less for everyone else – it just reflects that CEO’s worth in the marketplace and the relative worth of the work that others in the company are doing.

A janitor, a clerk, or a receptionist get paid what they would get paid at similar levels regardless of what the size of the company is or what the CEO is making. Upper management compensation therefore has no effect on lower level compensation so what is really happening?

A wise man once said, “you will never make real money unless your name is on the letterhead.” He was the senior partner of a law firm. This was his way of saying that ownership of the business is where you prospered, not working for someone else.

This is still relatively true today. For the vast majority of people, they will not be superstars on a playing surface, on a video screen, on an MP3 file or on Wall Street. The way to real wealth is in ownership. But most companies require capital to start up. In the case of Jorge and his father it was money to purchase that first truck, for others it might be the cost of equipment or materials or paying the lease for the first few months while the business is getting started.

But regulation and taxation policy in this country keeps taking more and more from the pockets of the middle class and leaving less for those would-be entrepreneurs to invest in themselves and start a business. In the trucking company’s case it was onerous anti-greenhouse gas emissions regulations, for others it will be something else.

For everyone the rising cost of energy, food and other staples due to the wrongheaded approach we are taking in terms of energy production; (requiring energy be from expensive and unreliable GREEN sources such as wind and solar) will eat even more into the disposable income that for some is the seed capital to advance their American Dream.

We need to start devising policies that lessen the tax and regulation burdens on average Americans if we want to see a more vibrant economy and close the wealth gap.