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Source link: http://archive.mises.org/17109/out-of-business/

Out of Business

May 26, 2011 by

The last few years as an executive in a manufacturing company gave me a frighteningly close look at the inner workings of regulators in our government. Maybe I’m just naïve, but what I discovered was shocking. They are not “creating jobs” or “improving the economy” — precisely the opposite.

FULL ARTICLE by A Manufacturer

{ 53 comments }

prettyskin May 26, 2011 at 8:35 am

When two entities are fighting mercilessly for their livelihood, who is the bigger liar?

C.J. May 26, 2011 at 8:42 am

The one who makes you “serve the greater good” while he holds a gun to your back.

Virginia Llorca May 26, 2011 at 3:18 pm

“The greater good” is defined by the size of the gun.

billwald May 26, 2011 at 6:31 pm

No one else remembers lines of trucks going up hill on every highway, every truck belching black smoke? If that is what “free enterprise” accepts as the norm then give me socialism.

nate-m May 26, 2011 at 7:16 pm

This form of ‘Free Enterprise’ is still better then being ignorant.

Soot represents inefficiencies. Excessive soot causes maintenance issues. Its’s 98% carbon and will cake surfaces and get into the oil. Lots of carbon build up in the oil reduces it’s effectiveness which shortens the life of the engine. Truck owners would fiddle with the injection to improve performance, but that would cause the black smoke. However, modern turbo engines and computerized fuel injection can be used to improve performance of motors and improve efficiency… saving money, hardware, and getting better performance. That ‘black smoke’ to a business owner is just money being burned.

Plus the soot itself is largely harmless. It’s the gasses you don’t see that are the dangerous stuff and regulations attacking ‘black smoke’ are attacking a mostly cosmetic issue. For the work they are doing those big diesels are far more environmentally friendly then gasoline engines. Forcing these guys to use gasoline engines or forcing them to unload their trucks and load up gasoline trucks to take their goods into town would be a disaster.

Conrad May 26, 2011 at 8:20 pm

What a broadly inaccurate statement you have smeared across the industry! Maybe one in one-thousand trucks belched black smoke as you suggest. I can’t remember any time when a line of trucks were belching black smoke as they motored along going up a hill or going down a hill on even a single highway much less every highway! If a truck is belching black smoke, don’t you think that there is something wrong with the truck’s engine? Don’t you think the firms owner would want it fixed in order to gain better engine efficiency and higher mileage and lower costs and higher profits or more competitive pricing?

Virginia Llorca May 27, 2011 at 12:00 am

Diesel engines did that sometimes but everyone understood it was carbon and not poison. And diesel fuel used to be less than half the cost of regular.

Old Mexican May 27, 2011 at 12:37 am

Re: billwald,

If that is what “free enterprise” accepts as the norm then give me socialism.

You get your wish:

http://www.thefreemanonline.org/columns/why-socialism-causes-pollution/

“The Soviet government’s imperatives for economic growth, combined with communal ownership of virtually all property and resources, caused tremendous environmental damage. According to economist Marshall Goldman, who studied and traveled extensively in the Soviet Union, “The attitude that nature is there to be exploited by man is the very essence of the Soviet production ethic.”

A typical example of the environmental damage caused by the Soviet economic system is the exploitation of the Black Sea. To comply with five-year plans for housing and building construction, gravel, sand, and trees around the beaches were used for decades as construction materials. Because there is no private property, “no value is attached to the gravel along the seashore. Since, in effect, it is free, the contractors haul it away. This practice caused massive beach erosion which reduced the Black Sea coast by 50 percent between 1920 and 1960. Eventually, hotels, hospitals, and of all things, a military sanitarium collapsed into the sea as the shore line gave way. Frequent landslides–as many as 300 per year–have been reported.

Water pollution is catastrophic. Effluent from a chemical plant killed almost all the fish in the Oka River in 1965, and similar fish kills have occurred in the Volga, Ob, Yenesei, Ural, and Northern Dvina rivers. Most Russian factories discharge their waste without cleaning it at all. Mines, oil wells, and ships freely dump waste and ballast into any available body of water, since it is all one big (and tragic) “commons.”

Only six of the 20 main cities in Moldavia had a sewer system by the late 1960s, and only two of those cities made any effort to treat the sewage. Conditions are far more primitive in the countryside. “

Walt D. May 27, 2011 at 9:54 am

To paraphrase Patrick Henry,
“Give me socialism and give me death”.
What we are talking about here is fascism. Fascists hate small business. It is much easier to control a few large businesses that thousands of small ones. Unfortunately, regulations drive businesses out of country. Outsourcing is not just about cheap labor.

Virginia Llorca May 28, 2011 at 12:26 pm

Creeping liberal fascism, and it’s disguises, (Liberal Fascism, Jonah Goldberg) would be an interesting topic for someone to explore here. I lectured a young police officer at a back to school fair about how wrong fingerprinting children is and should not be done in America as it is a fascist practice. He was unprepared to deal with my remarks, and should have been as part of his public service training. Several people waiting in line to have their children fingerprinted walked away from the table. Most did not. Another band wagon, only this one brightly painted and shiny.

Ana Vasconcelos May 26, 2011 at 8:36 am

Regulation is the tyranny democratic people should fear.
Tocqueville has a chapter about it in his book “Democracy in America”.

C.J. May 26, 2011 at 8:47 am

To the list of those who benefit from the regulation, I would add the political entrepreneurs: competitors that can’t compete without government help.

It’s more than just the bureaucrats making a living, or competitors surviving, or environmentalists “saving the world,” that account for the preponderance of such obviously anti-job-growth regulation. Washington’s objective is to create a society of dependents, thereby increasing its power.

Gabriel Sterling May 26, 2011 at 9:22 am

I can attest to this in my own “very” small manufacturing/repackaging business. When I started my little pool chemical repackaging business, there were two levels of fees to pay to EPA for the right to sell EPA “registered” products. For a small company like mine it was like $1000, then the next year it was $1250. This was for the first “registration”, the second was like $5000. Then when I was in year three, they passed a rule that all registrations, including the first (which had been a small business exception) had to be the same so it jumped to $5000 and I had two products, so the total was $10,000.

Now mind you, we had to pay a fee to each state as well. That is not a lot of money to DuPont, but to a small manufacturer like myself it sucked away a lot of money. And it had to be paid during our slow time in a lump sum, you could not spread payments.

I eventually had to drop hose products and finally shuttered the business. the first couple of years are always the toughest, and the government moving the ball made it that much tougher.

Bill Kazaros May 26, 2011 at 10:16 am

Atlas Shrugged.

Amanda May 26, 2011 at 10:24 am

I thought the exact same thing. When I first read Anthem in 1977 I could not wait to read everything Ayn Rand had written. Even as a inexperienced college student, I was overwhelmed with the truth in Atlas Shrugged and could see this was exactly where our country and government were headed. Perhaps that is why nothing that has happened in our economy and government over the past 30 years has surprised me. Where is John Galt-I want to go join him.

Marissa May 26, 2011 at 4:19 pm

Well…you could always be “John Galt”.

Deefburger May 26, 2011 at 10:16 am

I consider myself an environmentalist. I also understand completely the problem you face. It’s not right and it’s not efficient, and it does not help the environment. Studying the causes and effects we as humans is as far as environmentalism should go. From there, it should be up to us as consumers and producers to decide what we do, and how we do it, and why we do it.

My local growers are gaining ground on the industrial growers because my local community likes to buy locally produced Organic food. No regulator made that happen.

My local energy company utilizes as many “green” technologies as possible from as many independent sources as possible because the local community wants clean energy. Not because the regulators told them to. Many of my neighbors are supplimenting their energy with home brew wind and solar, and the power company buys the excess. If they didn’t, those sources would go off the grid.

Basic sound economics is all we need, that and a good dose of common sense. Is the planet warming up? Yup. Do we have anything to do with that? Yup, probably. Can a regulator stop it? Nope, all he can do is muck up the works for everybody making an effort at efficiency and sustainability!

Gun toting regulation waving environmentalists are not heros. They are parasites making a bad thing worse. Real environmentalism starts and ends at home. Regulators can go suck eggs.

Stefano May 26, 2011 at 11:00 am

Deefburger-

I am similar to you in many respects. It is only because my wife put her foot down that we don’t have a compost toilet in the house.

There’s got to be a less loaded term than “environmentalist.” Conservationist, maybe? I read a book once which someone coined the term “crunchy conservatives,” but that only works if you’re a conservative.

Anyway, the fact is, “environmentalist” does carry the connotation of eco-nazi for most folks, myself included.

Lola May 26, 2011 at 10:17 am

Huh! You should try and run a modest retail financial advice and investment business in the UK if you want to experience the full destructive and corrosive effect of ‘reg-yew-lay-shun’ as operated by unaccountable functionaries.

Vanmind May 26, 2011 at 10:40 pm

So run it under the table.

pelletman May 26, 2011 at 10:24 am

4 USC 72 Public offices; at seat of GovernmentAll offices attached to the seat of government shall be exercised in the District of Columbia, and not elsewhere, except as otherwise expressly provided by law. Ask the sons of bitches to show you the delegation of authority (Act of Congress) that allows them to operate in one of the several states. They don’t have it.

minogaade May 26, 2011 at 10:33 am

This is a poorly written article that seems to be hiding behind vagueness as a pretext for misinformation (in the nature of limited disclosure). It provides no means by which anyone can independently evaluate the basis of a government’s desire to regulate the item in question, other than to assert that the privileged smaller engines in fact consume more energy than larger ones, when one evaluates systemically. It dismisses any external review as self-interested and deceitful. Really? Everyone who is interested in regulation does so on the basis of deceit: politicians, regulators, journalists, and professors. Essentially the article seems to be asserting that any regulation is by definition corrupt, since regulators will be paid for their services and hence necessarily act in self-interest. Do I not detect a TAD of self-interest at the root of the argument here? The part that mystifies me is the contempt for academics who receive “huge government grants” to study the issues, and get paid as expert witnesses. They also get grants to do cancer research, which has the local shaman outraged. While I often read Mises Daily pieces that make some sense, this is not one of them.

Carl May 26, 2011 at 11:21 am

The author is more bemoaning environmental regulatory matters that are poorly conceived, and actually increase pollution, all while having the affect of destroying job and wealth creation, as well as lower prices for consumers. He may come off as vague, but his point still stands.

And I don’t think comparing cancer and environmental research is fair. Cancer research is pretty straight forward. Everyone wants to stop cancer. Environmental? How many times have environmentalists come out and declared some emergency (global cooling, pesticides destroying the eco-system, etc) with no real evidence? Environmentalism is much, much more controversial. Paying professors to do research that confirms the bias of environmental bureaucracies is never a good idea.

Virginia Llorca May 26, 2011 at 3:30 pm

Hear, hear. The grants for cancer research are largely from pharm companies. Apples and oranges. Not a poorly written article; a blog illustrating a particualr instance that is unfortunately a part of our lives about which we can do little but expound. A well off land owner in our county, owning a large, commercially very valuable tract, containing one residence and one ‘guest house’, in an unincorporated section of a growing area of retail and small manufacturing success, owns ONE windmill that the locals cannot NIMBY over. He generates enough power to sell the excess back to the grid. Don’t give me that rock and roll about wind power and solar power can provide 20% of needs at most. Politics, lobbyists, band wagons. No science.

nate-m May 26, 2011 at 5:14 pm

The problem is most “environmentalists” leaders are lying peices of shit. They are frauds, criminals, hucksters and care more about money, power, and self-agrandisement then the earth.

Most of there followers are clueless victims who never were taught critical reasoning skills. These poor bastards just follow whatever sounds good and fall for these soothsayers’ line of BS every time. And to compound the problem they are hell bent on inflicting their leader’s political scheming on the rest of us.

I love nature and true environmentalists are fantastic people,
unfortunately they are very rare.

Old Mexican May 26, 2011 at 12:59 pm

Re: minogaade,

Essentially the article seems to be asserting that any regulation is by definition corrupt, since regulators will be paid for their services and hence necessarily act in self-interest. Do I not detect a TAD of self-interest at the root of the argument here?

Thieves (like regulators) would also argue that people who advocate for armed self-protection against thievery are doing so out of self-interest.

Vanmind May 26, 2011 at 10:45 pm

The cancer research industry is rife with fraud, designed by Big Pharm to perpetuate “chemical coping mechanisms” rather than actual solutions.

Inquisitor May 27, 2011 at 8:27 am

Oh come off it. The issue is usually that people assume governments are truth-seeking, pure, benign entities, looking out for the public’s good. Consequently, the same assumption extends to government-funded research. Realistically, the government is benighted by the same incentive issues as any institution, if not worse since it’s a monopoly on law/order/legitimate usage of force. Environmental research – particularly with respect to “climate change” – has been riddled with misconduct, lies etc. Thus, there is justifiable contempt towards it. And many libertarians distrust the peer review system mainstream academics subscribe to anyway, on the basis that it favours incumbent paradigms, and with good reason.

minogaade May 27, 2011 at 9:38 am

I think it’s unwise to extrapolate from the actions of “governments” to particular research programs which are funded by specific agencies in the U.S. The problem is that that level of generalization loses any purchase in reality. I’m not an expert on climate-change research, but it seems a rhetorical leap to claim that it is “riddled with misconduct, lies, etc.” Nothing is accomplished if we all just throw words into the air. There are occasionally charges of misconduct in academic research, of various types, e.g., Marc Hauser of Harvard’s alleged misconduct; significant issues with “ghostwriting” by academics who were knowingly or unknowingly collaborating with pharmaceutical companies (see, e.g., NYT article: http://nyti.ms/nh48f). But the very fact that these charges are so serious suggests to me that such misconduct is not rampant. Can one show problems and limitations in research? Sure, the question are important ones of quality and quantity, subject to intense scrutiny (who does this, though, in your model?).

A brief comment again on the article in question. One–what is the vocational specialty of the author? Is s/he adequately trained to assess the environmental issues related to the products being discussed? This is not an idle issue. Also–one of the primary criteria for disqualifying experts is that they have a vested interest in outcomes, the obvious issue of conflict of interest. This is why the collusion of some academics with some pharmaceutical companies is so dangerous. It’s also why the academy must be free of direct corporate influence. I don’t see how libertarians have any means of dealing with conflict of interest. In fact, that IS their charge against regulators, but as they say, “Hello, pot!” Also — Another seeming oversight of this author is the idea that by restricting the number of large tractors produced, jobs are lost. Question: do the smaller tractors grow on trees? I get the impression that this sort of article is a brand of anti-regulatory pornography, designed to titillate entrenched believers.

I would say that the biggest problem that we face as a society is this rhetorical idea of the “false dilemma,” a classic logical fallacy, and something fiercely exacerbated by the internet, which allows, in Bruce Cockburn’s words, “every psychopath to have his own magazine,” left or right. We either have complete and utter socialist/communist/marxist/totalitarian offensive destructive oppressive hellish inept evil criminal self-serving regulation or we have libertarian Ayn Randish Koch-whore anti-human anti-social corporate greed toxic grab-your-planet non-regulation. These are said to be our choices. What good can come of such foolishness?

I agree with you about the problems of “incumbency,” The problem with so many intellectual endeavors is that they represent the profound thinking of a few brilliant people, and the rest of us just mine the ideas for a living, not sufficiently gifted to effectively evaluate them. I’m always reminded of what John Wooden once said when asked if he was worried that his UCLA basketball team of freshmen and sophomores was facing a much more seasoned team in the NCAA finals. Wooden said: “Experience is no substitute for talent.” But I don’t see John Galt standing there, I see Albert Einstein. And look what we did with HIS ideas.

Old Mexican May 27, 2011 at 3:01 pm

Re: minogaade,

A brief comment again on the article in question. One–what is the vocational specialty of the author? Is s/he adequately trained to assess the environmental issues related to the products being discussed?

Is a bureaucrat? Are you, for that matter?

We either have complete and utter socialist/communist/marxist/totalitarian offensive destructive oppressive hellish inept evil criminal self-serving regulation or we have libertarian Ayn Randish Koch-whore anti-human anti-social corporate greed toxic grab-your-planet non-regulation.

Are you trying to make the point against false dilemmas by positing strawmans? Tsk, tsk…

minogaade May 27, 2011 at 3:53 pm

I am NOT trained in the area in question, so I can’t evaluate the environmental impact arguments, but it’s not as if they’re presented in any form that would allow even an expert to. That’s my point.

As for creating straw men, I was in part thinking of a comment on this page:

The problem is most “environmentalists” leaders are lying peices of shit. They are frauds, criminals, hucksters and care more about money, power, and self-agrandisement then the earth.

etc.

Virginia Llorca May 27, 2011 at 4:22 pm

I don’t get who is supposed to come off what. I don’t see anyone here standing up for the pure, altruistic motives of our government or anyone else’s government. Everyone knows the joke, “I’m from the government and I’m here to help you.” It grows harder each day to hope we can teach our future generations the difference between autonomy and anarchy. There someday may not be a difference

Bogart May 26, 2011 at 10:34 am

The real issue missed by these regulators is one of scale. Bigger and faster is better. If I own a landscaping business and want an F350 extended cab pickup to pull my trailer and carry my stuff then anything else is less optimal and will ultimately force me to lose efficiency and consume more fuel. The same is true for industrial equipment.

J. Murray May 26, 2011 at 11:24 am

What the regulators and the environmentalists (I’ll use the crunchy conservative thing above for the time being to refer to guys like Deefburger) don’t seem to comprehend is that businesses naturally want to be environmentally friendly. If I developed an “engine” that uses 90% of the fuel and puts out the same amount of energy, my engine will sell so long as the difference of the cost of my engine and my competitor is the same or less than the present value of the savings in the fuel costs. Businesses see waste as throwing money away. Anything not put into the final product that the customer wants to buy is waste. Carbon dioxide emissions are waste, which is why companies figured out that filtering CO2 through water creates industrial acid that can be sold. The less waste there is, the lower the costs or the higher the revenue.

For instance, if I were to develop an engine and sell a truck that is otherwise identical in performance and features to the F-350 but had a fuel economy of 30 miles to the gallon and sold it at the same price, I’d have customers lining up around the block. I bet Bogart would buy one over the Ford. Why wouldn’t he? I just cut his fuel costs in half. That’s how business-to-business profits are made. Companies go to businesses and sell them products that allow the business to increase productivity while using the same or fewer resources.

Free markets are naturally “crunchy conservative”. No regulation required, regulation just gets in the way of the process and slows down the improvement.

Tim Kern May 26, 2011 at 10:42 am

Quite aside from the supposed “environmental merits” of any of the arguments, this kind of micromanagement by bureaucracies and special interests is not required of the federal government by the Constitution; therefore, it is prohibited.

The advice I gave Boeing on the recent South Carolina blowup seems to obtain here: “Do it anyway, and tell them to go to hell.” It’s time to stop pretending that illegal powers are valid.

Stefano May 26, 2011 at 11:03 am

I live down the road from the Boeing plant. I believe they could actually raise a private, volunteer army to keep the feds away and place open-that’s how excited the locals are about its presence.

J. Murray May 26, 2011 at 11:27 am

A suggestion I offered via the Wall Street Journal back when the news broke was to set up a privately held corporation with 100% shares held by Boeing, lease the plant to it for $0, then license the Dreamliner production to the plant for them to sell out on the market. Retain the profits via dividends.

Stefano May 26, 2011 at 12:24 pm

Wouldn’t that end up being subject to more federal harassment, though?

I wrote the above in jest, but there is a sense here, that SC may seek any possible action to nullify federal intervention in Boeing’s local operations. Haley, our governor, is decidedly anti-union.

http://www.southcarolinaradionetwork.com/2011/04/23/haley-on-boeing-complaint-i-thank-the-nlrb/

J. Murray May 26, 2011 at 4:09 pm

It’s not an ideal situation, but the NLRB won’t have any control over that kind of arrangement. They shouldn’t have to even go through those hoops to get the plant operational though.

Capn Mike May 26, 2011 at 12:13 pm

Make a great “anti – Norma Rae” movie!!!

Vanmind May 26, 2011 at 10:50 pm

When I started a job at a Boeing subsidiary, the “Meet New People” questionnaire for the intranet had a space for Personal Interests. After I entered “Rothbardian market anarchy,” the intranet post announcing my hiring featured a Personal Interests section that was left blank, and I was let go within the month.

Bill May 26, 2011 at 11:30 am

Name and shame, name and shame! We should not allow any “Spokesperson” to hide behind a veil of anonymity when acting on behalf of their employer/institution; spokespersons should be photographed, quoted and identified by name and put on display in the street where they live in the hope that there are enough people with good sense there, who can berate and ridicule them for their shameful tactics. We didn’t forgive those Germans who claimed to have ‘only been following orders’ during WWII, we can surely expect our fellow citizens act according to their natural sense of justice.YouTube them ’till they glow!

BioTube May 26, 2011 at 12:52 pm

The whole point of going nameless was that he wasn’t writing on behalf of the company, but of his experiences in it.

paul nelson May 26, 2011 at 4:03 pm

and excellent suggestion nBill. I would have expected to see your name and photo along with your home address so that you could be properly shamed by your comment

BoB May 26, 2011 at 11:59 am

Well, the regulation started with someone or one’s who saw the benefit at a particular time unbeknowst to them the multiplying effects of decades of many people doing this on behalf of their interest, through the double-standard or untouchable nature of the Modern State.

Didn’t Rothbard speak of this in one of his tome’s, and the ultimate culprit was the businessman who needed regulation to stomp out competition?

Of course now, downwind the regulatory agencies may have some autonomous self-interest to stay in business since the lucrative nature of their sweet salaries and benefits, plus the chance of possibly joining the lobbying industry in some capacity.

Now it’s very complicated with the vast web of intertanglement of govt. & business relationships, (in some industries more than others), to sometimes come up with the “Conspiracy Theory”, of following of the method and reasons that utliize the “Follow the Money” concept.

It’s not really a conspiracy, its folks who want to circumvent the Hard, but Honest Market Process or that really bad word “Cut-throat Competition”, to their “Big Dream” or whatever they deem Economic or Social Success. And they do this with the every so successful realm of Coercion through the Modern State.

Bator May 26, 2011 at 1:15 pm

Reminds me of my time working for the evil Alyeska Pipeline in Alaska.

That horrible pipeline was always swarming with animals using it for shelter, shade, and protection from hunters. Those poor animals were so terrorized by our human activities that they almost always slowly ambled a few steps away if we got too close.

Those malicious BP bastards would not allow us to set one foot off established roads and trails lest we crush the lichen. Nor would they allow us to shoot the bear that spent several hours trying to break into our work truck – while we were in it.

Pure evil, those oil companies.

Virginia Llorca May 26, 2011 at 6:37 pm

Let’s hear it for irony. Especially in dialogue. At this moment Sean Hannity is discussing the lizard in Texas that is going to hold up more US fossil fuel production. I am waiting for the link to the dissertation on “Rango” as a libertarian thesis. And now let’s hear it for perspective.

Derek Hays May 26, 2011 at 7:36 pm

To author: Great article, I agree. Regulations never seem to work well for the regulated.

Carl E May 26, 2011 at 8:21 pm

Out of Business
I feel so sorry that the government is taking our freedoms.
In this case, they take freedoms in exchange for poverty.

Governments are given the authority to punish evildoers
BUT America has an immoral government. And this government is the greatest cause of all evil.

My question is what can we do to stop it

newson May 26, 2011 at 8:22 pm

i take umbrage with this disclaimer: “Although I am not a conspiracy theorist…”.

first, because the author patently does believe that government employees can work in concert to thwart private initiative and harm private interests. second, while the author wishes to convince people of the possibility of organized retribution in this case, he is ready to join the government’s chorus line regarding others.

http://www.youtube.com/watch?v=6K5M0xtxQVQ

David W May 28, 2011 at 9:10 pm

Not that such bad behavior has been unfashionable in the past, but the effort to use government as an agency to define who makes money and who pays, by force, has reached a fevered pitch.What pisses me off, and should piss every American off, is how the concerned and the patriotic get labeled as “conspiracy theorists” when they point out the obvious; that there are people in government and parts of industry making it harder for upstarts and the truly industrious to compete, by law. It’s been going on for decades, and it looks to be FINALLY taking a conspicuously heavy toll. Welcome to my reality for the past few decades.

Alexis May 29, 2011 at 5:35 pm

This is a precise example of the expanded and practically unregulated power of the federal government. Instead of solving issues and helping the economy they express their power in taking it from others.
To anyone who has studied governments,they know that this is fascism. The current government exists solely to take away rights and freedoms that its supposed to protect.

Douglas May 30, 2011 at 8:05 am

The article is not convincing at all. Incredibly one sided and that side is not clearly presented. I’m finding this typical of the articles from Mises.

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