It is a paradox of our age that the interventionists think the public is too stupid to consult Angie’s List before hiring a lawyer, and so they need politicians to weed out the really bad ones by requiring law licenses. Yet, who determines whether a person (often a lawyer!) is qualified to become a politician? Why, the same group of citizens who were too stupid to pick their own lawyers.
Posts tagged ‘licenses’
First, congrats to many millions of people who can remain in this country, a status they should have always have had. We can argue whether anyone who makes his or her way over the border should be able to vote or draw benefits, but there is no doubt in my mind that they should be able to live anywhere they can pay the rent and work anywhere that there is an employer willing to pay them.
I am willing to accept the analysis of folks like Ilya Somin who say that the President's non-enforcement decision on immigration laws is legal. But I think his concept of "precedent" when he says there are precedents for this sort of thing is way too narrow. This is an important, dangerous new precedent.
What I think folks are missing who make this argument about precedent is that while many examples exist of the Executive Branch excercising proprietorial discretion, the circumstances are without precedent in both scale and well as in its explicit defiance of legislative intent. One can argue that Reagan's executive actions vis a vis immigration provide a precedent, for example, but Reagan was essentially following the intent of then-recent Congressional legislation, arguably just fixing flaws with executive orders in the way that legislation was written. What he did was what Congress wanted.
The reason I think Tiberius Gracchus is a good analog is that Gracchus too took actions that were technically legal. Tribunes always technically had the legal power to bypass the Senate, but in hundreds of years had never done so. Despite their technical legality, his actions were seen at the time as extremely aggressive and plowing new Constitutional ground, ground that would soon become a fertile field for authoritarians to enhance their power.
Somin includes the following, which I think is an example of where defenders of the President's process (as different from the outcomes) are missing reality. He writes:
I would add that the part of the president’s new policy offering work permits to some of those whose deportation is deferred in no way changes the analysis above. The work permits are merely a formalization of the the president’s exercise of prosecutorial discretion here, which indicates that the administration will not attempt to deport these people merely for being present in the United States and attempting to find jobs here. They do not purport to legalize their status, and the policy of nondeportation can be reversed at any time by the president or his successor.
This is one of those statements that are technically true, but totally obtuse at the same time. Issuing formal get-out-of-jail-free cards to 5 million people is unprecedented. Think of it this way: Imagine a Republican President who is opposed to the minimum wage. The Executive branch is tasked with enforcing that law, so wold the folks defending the President's methods also argue hat the government can issue permits to 5 million businesses allowing them to ignore labor law? Or emissions standards? Or insider trading laws?
People are just being blinded by what they rightly see as a positive goal (helping millions of people) if they fail to see that the President issuing licenses to not be prosecuted for certain crimes is a huge new precedent. Proprietorial discretion is supposed to be used to avoid patent unfairness in certain cases (e.g. the situation in Colorado with conflicting state and Federal laws on marijuana). It is not meant to be a veto power for the President over any law on the books. But I can tell you one thing -- it is going to be seen by future Presidents as just this. Presidents and parties change, and for those of you swearing this is a totally legal, normal, fully-precedented action, be aware that the next time 5 million wavers are issued, it may well be for a law you DO want enforced. Then what?
Update: Libertarians are making the case that the Constitution never gave Congress the power to restrict immigration. I could not agree more. However, I fear that will have zero impact on the precedent that will be inferred from all this. Because what matters is how the political community as a whole interprets a precedent, and I think that this will be interpreted as "the president may issue mass waivers from any law he does not like." Now, since I dislike a hell of a lot of the laws on the books, perhaps over time I will like this precedent. But the way things work is that expansive new executive powers seldom work in favor of liberty in the long run, so I am skeptical.
In all the states we operate in, sales tax registrations are open-ended. This means that once you register for a sales tax license, you keep it without having to do any sort of renewal. However, there are penalties for not reporting every month on an active license, so there are pretty strong incentives to report a closed license as soon as one is not using it. In effect, your monthly report is your renewal.
For some reason, Arizona has decided that it needs to put businesses through an annual renewal process for sales** tax licenses. I have no idea why. Even California does not make folks jump through this hoop. Anyway, I chuckled at the name they assigned to this change: "TPT Simplification Program." Because everyone knows that adding an extra paperwork step each year is a simplification. I guess it simplifies the process of keeping their employment numbers up at the Department of Revenue.
** AZ actually call its sales tax a "transaction privilege tax." Since I do not consider voluntary business transactions between two individuals to be a "privilege" that can only be granted by the state, I refuse to use the term.
Despite the title, I should make it clear that I oppose the proposed legislation in Arizona to allow warrant-less searches of abortion clinics. The stated justification for the law is to ensure safety and healthy conditions at clinics, but the law is transparently about harassing a particular type of business.
However, I must admit I get some schadenfreude from this. Supporters of the bill say that they are only extending the current standards applied to many other businesses, such as restaurants and bars, to abortion clinics.
Regulators from OSHA to the health department have tremendous powers to barge into private businesses and conduct searches without a warrant, whatever the text of the Fourth Amendment might say. They justify this with licensing regimes that require these businesses to have state licenses, and then require businesses accept these extra-Constitutional searches as a prerequisite for the license.
I have opposed these licensing regimes for years, in part because the consumer protection justification is often a sham -- what they really want is to be able to exercise control of private businesses. In some cases, these laws are used to protect incumbents. In some cases (e.g. here) they are used to try to shut down the entire (legal) industry.
Statists on the Left have generally poo-pooed these concerns. Their typical response is that businesses are just whining, and that only those in violation of the law have something to fear. Now, they suddenly are recognizing that an unannounced search per se is threatening.
Update: I find abortion proponents on the Left to be among the worst examples of faux libertarians. They claim their issue is about choice regarding one's body, but then tend to simultaneously support all kinds of government interventions in personal medical decision-making. They are all for the sanctity of private property when there is an abortion clinic on the site; not so much otherwise.
I already had this column at Forbes in the works, but I could not resist switching the protagonist from myself to Obama's Julia. Every tax, license, and story here are real ones I have experienced in my business. Here is just a small sample:
So twelve registration numbers and 12 monthly/quarterly/yearly reports later, surely Julia has fulfilled all her obligations to the government. Unfortunately, no, because she has not even begun to address licensing issues. To begin, the County will require that she get an occupancy permit for her campground, which must be renewed annually. This seemed surprisingly easy, until someone from the County noticed she had removed an old rotting wooden deck from the back of her store that had been a safety issue and an eyesore. It turns out she was in violation of County law because she did not get a removal permit first. She was required to get a permit retroactively, which eventually required payments to seven different County agencies and at one point required, for a reason she never understood, the collection and testing of a soil sample.
Because she will be selling packaged foods in her store (e.g. chips and pop-tarts), she also has to get a health department license and inspection. She had originally intended to keep some fresh-brewed coffee for customers in the store, but it turned out that required a higher-level health license and eight hours training in food handling. She might have been willing to pursue it, but the inspector told her that to make coffee, she would need to install a three-basin stainless steel wash-up sink plus a separate mop sink in her store, and she decided that coffee would have to wait.
Once through the general health licensing process, she then needed to obtain licenses for individual products. She wanted to sell aspirin, so she had to get a state over-the counter drug sale license. She knew that customers would want cigarettes, so she had to obtain a tobacco sales license. One day as she was setting up, a state inspector noticed she had a carton of eggs in her cooler, and notified her she needed a state license to sell eggs (as Dave Barry would say, I am not making this up). And then there was the problem of beer.
Unfortunately, the combination of April being our busiest month every year (when all our seasonal operations start up), the addition of operations in two new states (which requires a myriad of registrations, permissions, licenses, etc), and several unusual very late bid packages for the operation of parks means that I am working on Sunday.
I spent my first hour of Earth Day, appropriately enough, fiddling with my building's computer HVAC system, trying to get the air conditioning (normally off on a Sunday) turned on. I was finally successful, so I can now enjoy a comfortable Earth Day even in nearly 100 degree Phoenix weather, thanks to modern technology and a generous helping of fossil fuel combustion.
Today the NLRB released its final rule mandating all private sector employers subject to the National Labor Relations Act to post notices informing employees of their rights under the Act. The final rule is scheduled to be published in the Federal Register on August 30, 2011. Posting of the Employee Rights Notice becomes effective November 14, 2011. Failure to post will be an unfair labor practice....
Failure to post the Notice will constitute an unfair labor practice which may be filed with the NLRB by any person. Further, the failure to post the Notice will be deemed evidence of anti-union animus or motivation where employers are alleged to have interfered, restrained, or coerced or otherwise discriminated against employees to encourage or discourage union membership or activity.
We already spend a thousand bucks a year or so with printing companies that keep us supplied with updated signs for all of our locations. At some point we are going to have to buy billboards to fit all the stuff we are required to post -- minimum wage notices, NLRB notices, civil rights policies, occupancy permits, sales tax licenses, liquor licenses, egg licenses, cigarette licences, fire inspections, health inspections. Soon I am sure we will have a couple of square feet of Obamacare notices.
This is just a sick, scary, amazing story of a man who came within days of execution because prosecutors knowingly withheld exculpatory evidence. And not something arcane and equivocal, but blood tests that were the wrong type and witness testimony that contradicted the main witness.
The Supreme Court has upheld the effective immunity of prosecutors from any penalties for not following the most basic rules. Forget sanctions or lost law licenses - why aren't these prosecutors on trial for attempted murder? Obviously, with the Supreme Court decision a legislative solution is required, but don't hold your breath -- there is nothing more bipartisan than being "tough on crime" when running for re-election so it is unlikely any safeguards of defendants will be improved.
It is amazing how certain institutions remain true to their DNA. I have already written twice about petty, mindless bureaucratic management in Mono County, California. They have yet again surpassed themselves with absurd inflexibility. I have occupancy licenses for each of our campgrounds there, about 12 sites. We are entirely current and have been punctilious about paying our County taxes on all sites month after month for 10 years.
Then, recently, apparently they sent out renewals on the licenses that somehow did not get to our mail box. So we missed the renewal deadline. Of course their position is that we are still responsible for renewing, but realize I have 175 locations across the country with zillions of license registrations. They admit we are entirely up to date on our taxes, we just did not submit the renewal fee for the licenses. There is no approval or regulatory process with the licenses, its just a way for them to collect a fee.
Well, without any second notice or phone call or any other such normal business courtesy, they canceled all the licenses. I now have to fill out pages of license applications 12 times, and submit 12 penalty fees, all for a total cost of over $1,000 and hours and hours of my time.
Can you imagine the outcry if the phone company or electric company or your landlord turned off service after one missed payment without any kind of second notice? But of course these guys are the government so we can be sure that they are public-spirited, lol. Seriously, they could not even turn the licenses back on with a payment, I have to start entirely from scratch with new applications. This is like 14 days after the payment due date. I called them 1 hour after receiving the 2nd notice to sort this out, but for these guys the second notice is a termination notice. Nice.
OK, so after the monks and coffins, here is the future licensing act ripe for abuse by industry incumbents to protect their position.
New state licenses required for anyone handling a mortgage application could help prevent a repeat of the bad loans that contributed to Phoenix's housing crash....
The law, passed in 2008, creates state oversight for people who take loan applications, gives consumers an avenue for reporting misconduct and establishes a fund to help repay borrowers who lose money because of unethical or illegal acts by their loan officers.
The law faces hurdles, as cash-strapped Arizona struggles to process thousands of new applications.
Still, advocates call it a success. Many of the risky - and sometimes illegal - home loans that helped lead to record foreclosures in Arizona might not have been made if the more than 10,000 unlicensed loan officers working then had been subject to more oversight.
How? If people were selling illegal home loans before, they were already breaking the law and the state obviously was unable to enforce the law. How is adding a piece of paper that must be applied for each year going to help? My company has all kinds of silly licenses - liquor licenses, guiding licenses, health licenses, tobacco sales licenses, over-the-counter drug sales licenses, even egg licenses - and in not a single case does the issuer of these licenses exercise any sort of oversight of our operations. If they get their extensive paperwork (so workers have an excuse to retain their jobs - after all someone has to process the paperwork) and their check, that is generally the sum of interactions with these organizations.
Now, some of these licenses were hard to get in the first place, but not for any reason of my character or ethics or business model. They were hard to get because their issuance has been co-opted by incumbent businesses in the state who use the process to limit competition. Liquor licenses are a great example - in places like Shasta County CA and Lake Havasu City AZ, we had a real problem getting the liquor license over opposition from existing businesses.
This is almost mindless naivete:
"Loan-officer licensing is long overdue in Arizona," said Felecia Rotellini, who for five years served as superintendent of the Department of Financial Institutions, the state agency regulating the mortgage industry. She is running for Arizona attorney general.
"A lot of bad loans wouldn't have been made if we had it before," Rotellini said. "It gives me peace of mind for consumers to know we have licensing now."
The author of the article just throws the following statement out there without any source, as if it was an axiom with which we all would agree
In Arizona, the housing boom and crash were partly fueled by loan officers, how they operated and how they were paid.
In fact, the author's incredible confidence in licensing is undermined in this adjacent statement:
Mortgage brokers, who run firms that connect borrowers with the best loans, have long been regulated by the Department of Financial Institutions.
Brokers employ loan officers, who work directly with borrowers, collecting their Social Security numbers and financial information to determine whether they qualify for a loan. Loan officers usually recommend types of mortgages and lenders.
These officers, sometimes called originators, weren't subject to state scrutiny. They worked under the licenses of their brokers, much the way an apprentice would work for a licensed contractor. Previously, that oversight was considered sufficient.
So the firms these guys worked for were licensed, but the individual employees were not. But if that licensing of firms, which after all is the level where loan practices and compensation policy are set which supposedly are at fault, how does licensing individual employees help? This is a typical political step that a) gets some state organization more money and power, b) generates one sound bite in a news cycle for some politician to tell voters that they care and c) does zero for consumers.
At the end of the day, the real cause of the housing boom was easy credit, and yes loan officers participated in this given that their commission-based incentives caused them to want to make every loan possible. But this incentive outcome would not have been some kind of insight to the people and system that employed the loan officers. In fact, everyone from the loan officer to the Congress wanted easy credit, and to blame one link in the chain of delivering this credit to consumers is madness. Going forward, there is absolutely no evidence that the government is going to reduce its history of promoting easy credit, as evidenced by any number of federal loan modification and lending programs over the last 2 years. So the likelihood that a government regulatory agency could have somehow headed off the bubble and its bursting is just silly. The government was a party to it.
In the long run this mechanism will almost certainly be co-opted by current loan issuers as a way to limit competition, much as real estate agents and lawyers and funeral home directors already do. As a minimum, this is a way for mortgage brokers to outsource some of the cost of running background checks and such on their employment candidates onto taxpayers. In fact, I wonder who was behind this law in the first place?
Backed by mortgage brokers and real-estate regulators, the law quietly went into affect on July 1
My new column is up this week at Forbes. This week it discusses the regulatory burden on small businesses. Here is an excerpt:
Typically taxation issues get a lot more attention than these regulatory issues in discussions of government drags on the economy. But these small regulations, licenses, and approvals consume management time, the most valuable commodity in small businesses that typically are driven by the energy and leadership of just one or two people. If getting a certain license is a tremendous hassle in California, large corporations have specialized staff they throw at the problem. When a company like ours gets that dreaded call that the County wants a soil sample from under the parking lot, odds are that the owner has to deal with it personally.
So the ultimate cost of many of these silly little regulations is that they each act as a friction that wears away a bit more available time from entrepreneurs and small business owners. The entrepreneur who has to spend two hundred hours of her personal time getting all the licenses in place for a new restaurant is unlikely to have the time to start a second location any time soon. Since small businesses typically drive most new employment growth in the United States, can it be a surprise that new hiring has slowed?
Incredibly, after the column was in the can, I experienced another perfect example of this phenomenon.
In the camping business, July 4 is the busiest day of the year. This year, on July 3, I got a call from one of my managers saying that the County health department had tested 20 ground squirrels in the area and found one with the plague. I know this sounds frighteningly medieval, but for those of you who live out west, you may know that some percentage of all the cute little western rodents, from prairie dogs to chipmunks, carry the plague. Its why its a bad idea for your kids and dogs to play with them.
Anyway, in the past, we have usually been required to post warnings in the area giving safety tips to campers to avoid these animals, what to do if one is bitten, etc. At the same time, we then begin a program of poisoning all the lairs we can find. It's about the only time any government body anywhere lets us kill anything, because only the hardest core PETA types will swoon over rubbing out a rodent carrying the black death.
But apparently, in the past when these mitigation approaches applied, the county health department was not in a budget crunch and in need of high-profile PR stories that would reinforce with taxpayers the need to fund their organization. This time the health department marched out and closed the campground on July 4 weekend, kicking out campers from all 70 sites. We spent the day dealing with angry customers, refunding money, and trying to find them new lodging on a weekend where most everything was booked up. Fortunately we have a large overflow area at a nearby campground and offered everyone a special rate over there.
It is hard to imagine that, given the whole year to test, they just suddenly happened to find a problem at one of the busiest sites in the LA area on the busiest weekend of the year, particularly since they simultaneously changed their mitigation approach from notification to closure. I have tried hard to find the original time stamp on the press release they sent out. I can't prove it, but it sure seemed like a lot of media had the story before we (operating the campground) had been informed of a thing. Incredibly, the health department was directing the campers to a nearby campground that was easily close enough to our campground to share the same rodent populations. But that campground had not had a positive plague test. Why? Because that campground has not been tested recently, at least according to the official who brought us the news. We're in very good hands.
Its pretty clear from this summary of the Obama administration legal brief that the Administration has no idea what its own immigration policy should be. I don't agree with all of the author's statements (for example, I am not a fan of e-Verify, as it just reinforces to me that the government has gotten itself in the business of licensing labor) but its a pretty interesting summary of just how muddled the Obama administration is on this topic. While I don't support our newest immigration law here in AZ, its easier to see why states like AZ feel the need to take some independent leadership on the topic.
In this brief, the Obama administration is challenging an earlier AZ state law that requires, as a condition to retain one's business license, that companies use e-Verify to check new employees legal work status (here and here). Unfortunately, Obama's head of Homeland Security (and thus all immigration-related activities) actually signed the law into being and the administration wrote a brief in favor of the law just 9 months ago, about the same time Congress reauthorized e-Verify without doing anything to strike down AZ implementation practices). I am not much of a legal scholar, but states use compliance with Federal programs all the time as minimum requirements for retaining business licenses -- e.g. non-payment of Federal taxes can cause one to lose his state business license, but no one has ever argued that is an illegal intrusion of states on federal powers. If the Feds want to argue all of these provisions are unconstitutional, fine by me. Anyway, the article linked above is highly entertaining.
Postscript: Here is the e-Verify post one must post in his business to be legally compliant:
This is fairly Orwellian for those of us who believe that all people have the right to work, irrespective of the country they were born in, and this right does not flow from any national government and therefore does not stop or start at any border.
This is a long-running series on this blog, and the most recent example comes from John Stossel.
[T]he IRS plans to require paid preparers to register with the agency. Subsequently -- the timeline is not yet firm -- they will be required to pass competency tests and receive continuing professional education"¦
In a report issued Monday, the agency also raised concerns about the quality of tax-preparation software"¦
As is usual in such cases, the IRS uses some ridiculously mundane task (in this case, hair cutting) as an example of something which is licensed but its super-critical target industry is not. This is typically supposed to be read as a justification of the extension of licensing to the new industry, though I always read it as a comment on how over-licensed we already are.
In field tests, the IRS noted Monday, tax-return preparers often gave bad advice"¦
Of course, in numerous field tests, the IRS itself often gives bad advice as well. From MSN Money a while back:
Two decades ago, Ralph Nader's Tax Reform Research Group prepared 22 identical tax reports based on the fictional economic plight of a married couple with one child. Identical copies were submitted to 22 different IRS offices around the country.
Each office came up with an entirely different tax figure. Results varied from a refund of $811.96 recommended in Flushing, N.Y., to a tax-due figure of $52.13 demanded by the IRS office in Portland, Ore....
Physician, heal thyself. Maybe the problem is in the tax code, not the preparers. From the same MSN Money article:
Since 1988, Money magazine has conducted an annual study where 50 tax professionals, including attorneys and certified public accountants, have been asked to complete a tax return for a hypothetical family.
The results have been unnerving. The professional preparers come up with different results each year -- with spreads of as much as $1,000.
So let's see where we are. The IRS can't get the answers right. Neither can the professionals. That may explain why there have been U.S. Supreme Court tax cases where as many as four of the justices got the answer "wrong."
Maybe the justification has nothing to do with the quality of tax preparation. Let's see who was happy about the IRS announcement:
H&R Block's enthusiastic response to the IRS's regulation plans suggests that the same thing will happen once the IRS licenses tax preparers:
Under the new rules, H&R Block "won't be competing against people who aren't regulated and don't have the same standards as we do," said Kathryn Fulton, senior vice president for government relations.
I will end, as I always do on this topic, with a quote from Milton Friedman:
The justification offered is always the same: to protect the consumer. However, the reason is demonstrated by observing who lobbies at the state legislature for the imposition or strengthening of licensure. The lobbyists are invariably representatives of the occupation in question rather than of the customers. True enough, plumbers presumably know better than anyone else what their customers need to be protected against. However, it is hard to regard altruistic concern for their customers as the primary motive behind their determined efforts to get legal power to decide who may be a plumber.
I am importing a fairly expensive art clock from Germany. It hit Fedex in Memphis yesterday, then apparently hit a snag. The US government demands that certain data on imported clocks be submitted to them before it can clear customs. Fedex had to pay someone for about half an hour of work (to track me down, interview me on the phone, and submit the paperwork) so that this critical data could be submitted to the Feds:
I kid you not. This would be one of the dumbest things I have seen from the government had it not been for the egg licenses I have to hold. This data was probably critical for some program pushed through by a Senator to protect some business in his district that does not even exist any more. I wonder if anyone in the government even remembers why this data is so vital (seriously, per question 11, how many wind-up clocks are coming through customs nowadays). Probably part of a program to protect America's essential capacity to manufacture clock movements over 12mm in thickness.
Most licensing efforts are nominally sold based on some public or consumer good but almost always end up being mostly about protecting politically connected incumbent businesses against new competitors. Nowhere is this more obvious than in liquor licensing.
If you want to start a new liquor-based business (restaurant or bar) in Phoenix, it is going to cost you a hundred grand just for the license.
In fact, the sales price for existing licenses has dropped in recent years, with prices for a bar license in the Phoenix area slipping from $100,000 to $85,000 or $90,000, he said.
And these are the numbers with record-low demand. Why does Arizona (or most other states) limit the number of licenses at all? Why not just issue them to all comers, and let the market sort out who is successful and who is not? Certainly we would likely see a lot more interesting restaurant startups if there was not an effective $100,000 tax on starting a restaurant imposed by the state.
State officials used to pretend the reason was to protect the community from being overrun by, er, dining choices or bars or whatever, but nowadays they don't even bother with such justifications and just give the true reason - they are protecting incumbents from competition.
Arizona hadn't awarded licenses since the late 1980s before the 2005 law passed. That was largely because holders of existing licenses didn't want to diminish their resale value.
Well, I am a holder of several existing Arizona licenses and I say -- open the floodgates!
If we can't trust the government to enforce the speed limit or issue liquor licenses fairly, how can we trust it to kill citizens fairly ?
It strikes me as odd that law-and-order conservatives can distrust every single department of the government except the guys who carry guns. The post office and the police are run by the same organization.
Apparently after 20 months of effort, I am within spitting distance of getting one of two liquor licenses I am applying for in Ventura County, California (the other had to be completely restarted due to some paperwork mistakes).
I had to just laugh at the last remaining hurdle. A part of the licensing process is to post a public notice at the site. The ABC called me and said they are holding my application until they get my affidavit of posting -- this is a one page form with my signature stating on what date the facility was posted.
But here is the funny part -- the ABC representative who is calling me actually posted the site herself. She visited the facility as part of a mandated inspection and then posted the site. The only way I knew what date the site was posted was by asking her. So ABC is requiring that I submit a form to tell them what day they themselves posted the site, a date I had to get from them before I could put it on the form to send back to them.
Coming soon: The Affidavit of Elevated Body Temperature and/or Vomiting that must be submitted before obtaining a doctor's appointment.
Continuing with a long-running theme here at Coyote Blog, here is another example of government regulation being anti-competitive and having the net result of protecting the margins of powerful, established incumbents against new entrants:
During a recent meeting, the Antiplanner was extolling the virtues of Houston's land-use policies, and a home builder at the meeting said, "Of course, no one here wants our city to be like Houston," meaning no one wanted Houston's land-use regime.
Why not? I asked. "There is too much competition down there. My company can't make a profit," he said. "You have to have some barriers to entry to be able to make money."
Those who accuse free marketeers of being supporters of big business don't realize that big businesses (and often smaller businesses) don't want a free market. In this home builder's case, he wanted enough restrictions on the market to keep out some of his competitors (most likely smaller companies that can't afford to hire lawyers and planners for every project) but not enough regulation to keep his company out
Several years ago my company had to obtain a liquor license in Shasta Country, CA. At one point, the issuance of the license had to be voted on by some group (County commissioners, the planning board, something like that). I was told the reason was that if they issued too many licenses, I would not be able to make money -- really, they were looking after me.
Well, not really. First, the government seldom has any idea even how a business works. Perhaps the liquor was a loss leader for my business, and I didn't care to make money on it at all. Perhaps I had a better marketing concept.
And herein we get to the real flaw -- the implication is that somehow the dangers is to the new entrant in a crowded marketplace, but in fact the reality is often the opposite. The actual competitive danger is often to incumbents, fat and happy with the status quo and unable to react quickly (due to all kinds of reasons from sunk investment to long held biases) to shifts in customer preferences. No matter what their stated reason, the true effect of such regulation is to protect current competitors from new entrants, new products, and new business concepts.
I can see the effects of this right here where I am sitting, out near the end of Cape Cod. Zoning and business regulation here is enormously aggressive - its is virtually impossible to start a new retail establishment here, particularly on virgin land. As a result, every store and restaurant here feels like it is right out of the 1950s. You'd hardly know there has been a revolution in retail or service delivery over the past few decades, because businesses here are sheltered from new entrants. They don't need to adopt better practices or provide better products or services, because they know they are not vulnerable (courtesy of the government) to competitive attacks from new entrants using more modern strategies.
We have taken over a demolished campground near Guntersville, AL (Honeycomb, if anyone is familiar with the area) and are currently in the process of rebuilding it and opening it to the public. We have not previously done business in Alabama, so here is what we have had to do so far to be legal:
1. Identified and retained an attorney in the state to act as our registered agent (required for in-state process service)
2. Registered as a "foreign corporation" (foreign meaning we are from another state) with the Secretary of State
3. Registered with the state for a Corporate income tax number
4. Registered with the state for a business privilege tax number (Nothing sets me off faster than when I get the pious "doing business in our state is a privilege" spiel from a state. What an awful theory of government and individual rights that statement represents!) The privilege tax (which is in some sates, like AZ, a euphemism for sales tax) seems to be a second income tax in AL, calculated on a slightly different basis. (Update: apparently the first year's taxes must be paid in advance, at the time one starts business in the state).
5. Registered with the state (yes, with another ID number) to collect sales taxes
6. Registered with the state to collect lodging taxes (By the way, spent a couple of hours with the code trying to figure out what these taxes apply to and what they don't, as this varies by state. Also, the tax rate tables are a complicated mess, and can vary for two locations located a few yards from each other).
7. Registered with the County (yes, with another ID number) to collect county sales tax. Actually, they outsource this collection to a private company called "Revenue Discovery Systems" which is a nice Orwellian name for a private tax collector. Is tax farming coming back in vogue?
8. Registered with the County to collect county lodging tax. (sigh, we are going to have to file multiple reports each month to report all of our transaction taxes - some states actually have unified reporting and payment).
9. No city taxes, it turns out, because we are just outside of any incorporated areas. Thank goodness for small favors
10. Registered for state unemployment taxes (yes, with another ID number). This was one of those circularities that really drive you crazy. I can't pay people until ADP has the state set up for us in the payroll system, but they need an unemployment number that the state refuses to provide until we have issued at least $1500 in state payroll checks. Arrrgghhh. Fortunately (?) ADP will go ahead and start issuing the checks without a number, but there is a $50 per month fee for doing so.
11. Registered for state income tax withholding (yes, with another ID number). Again, need this to pay people legally
12. Don't know yet if there is County withholding. There are county income taxes in some places.
Expect in these forms to fill out the exact same data over, and over, and over again. The state will maintain corporate records in about 6-8 parallel data bases and corporations are responsible for keeping every one of these data bases correct.
What I have not done yet, but know from experience I will have to do
1. Obtain county occupancy permits or licenses
2. Obtain county and/or state health inspections
3. Obtain Coast Guard inspections of the docks
4. Register with the state and/or county to pay personal property taxes
5. Get miscellaneous bizarre licenses that are absolutely unpredictable and impossible to discover until we are in violation, like the egg merchant license in KY and CO.
I thought for about 3 microseconds about selling beer and wine in our store, but I am sick and tired of the intrusive, picky, petty, and time-consuming liquor licensing processes in most states, and the income we make from alcohol sales simply doesn't measure up to the hassle.
Postscript: I try to remember that we should actually be thankful for this mess. Though it represents almost 20 hours of my personal time to set up, and hours of time each month filling out forms and reports, not to mention thousands of dollars a year to ADP to help manage, this mess is still orders of magnitude better than what an entrepeneur would face in France or Germany.
Whatever its stated purposes, in reality most professional licensing efforts are mostly aimed at using the power of government to limit new entrants, and thus new competitors, from a certain business:
In Alabama it is illegal to recommend shades of paint without a
license. In Nevada it is illegal to move any large piece of furniture
for purposes of design without a license. In fact, hundreds of people
have been prosecuted in Alabama and Nevada for practicing "interior
design" without a license. Getting a license is no easy task,
typically requiring at least 4 years of education and 2 years of
apprenticeship. Why do we need licenses laws for interior designers?
According to the American Society of Interior Designers (ASID) because,
Every decision an interior designer makes in one way or another affects the health, safety, and welfare of the public.
more than 30 years of advocating for regulation, the ASID and its ilk
have yet to identify a single documented incident resulting in harm to
anyone from the unlicensed practice of interior design...These laws
simply have nothing to do with protecting the public.
As always on this topic, I end with a quote from Milton Friedman on licensing:
The justification offered is always the same: to protect the consumer. However, the reason
is demonstrated by observing who lobbies at the state legislature for
the imposition or strengthening of licensure. The lobbyists are
invariably representatives of the occupation in question rather than of
the customers. True enough, plumbers presumably know better than anyone
else what their customers need to be protected against. However, it is
hard to regard altruistic concern for their customers as the primary
motive behind their determined efforts to get legal power to decide who
may be a plumber.
Update: This is timely, as 1-800-CONTACTS has informed me that due to various state and federal laws, they may not sell me the contact lenses any more that I have been purchasing from them for a year. I must go into an office and pay a government-licensed eye doctor to get an updated prescription. This is despite the fact that, once sized, contact lens strengths are easy to understand. Every year or so my eyes go up by about 0.5. I could easily get by still with my old contacts, or I could, if I wanted, self-medicate by adding 0.5 (the minimum step at my level of vision) to each eye and testing to see if this new setting was any better. This is exactly how people buy reading glasses (or pants, or shoes), by simple trial and error in the store. But I can't do this with my contact lenses -- or actually I do exactly this, but can only do it in a doctor's office, paying the government mandated annual toll to get my prescription updated.
Yes, I know, there are all kinds of fabulous reasons to go to the eye doctor each year, to test for glaucoma and other stuff. But why shouldn't that be my choice? The government doesn't force people with good vision to go to the eye doctor for such tests each year, only those of us with bad vision. The only analogy I can come up with would be having to go to your physician each year to get your shoe size validated before you could buy shoes for the coming year. After all, I am sure there are substantial health and safety issues with wearing poorly-fitted shoes.
Unlike many libertarians, I don't blog about gun rights much. Some think this odd, but in my mind this is like saying it is odd that a female blogger doesn't blog much about abortion. I have always thought it was pretty clear that the 2nd amendment protects an individual right to bear arms, but it's just not a subject for which I have much passion *shrug*
However, I did find this hilarious. Megan McArdle passes on the District of Columbia's petulant response to the Heller decision:
Here's what they're proposing:
* Allowing an exception for handgun ownership for self-defense use inside the home.
* If you want to keep a handgun in your home, the MPD will have to
perform ballistic testing on it before it can be legally registered.
* There will be a limit to one handgun per person for the first 90 days after the legislation becomes law.
* Firearms in the home must be stored unloaded and disassembled, and
secured with either a trigger lock, gun safe, or similar device. The
new law will allow an exception for a firearm while it is being used
against an intruder in the home.
* Residents who legally register handguns in the District will not
be required to have licenses to carry them inside their own homes.
OK, so I can have a handgun in the home solely for self-defense, but this self-defense weapon must be stored unloaded, disassembled, and locked. The only time it can be unlocked and assembled and loaded is "while it is being used against an intruder". Jeez. In the time it would take to unlock, assemble, and load the gun, I could probably build some McGyver device out of dental floss, a TV remote, and a couple of Thin Mint Girls Scout Cookies to just blow them up.
Postscript: I have never been that confident in my ability with a handgun. TV portrayals notwithstanding, I find them very difficult to handle accurately, and they require a lot of practice which most casual owners don't pursue. In my case, I find this a more realistic home defense weapon.
I have now tried out Windows Vista with its first service pack and I am still not clear what Vista adds over XP, except upgrade costs, an interface system that requires retraining employees and a lot of extra computer overhead, and compatibility problems. XP is stable and great for us.
As you may know, most XP OEM sales come to an end on June 30. Dell has already announced they will still sell XP units under the downgrade options in the Vista license. Good for them. In fact, it looks like Dell expects that customers will be willing to pay additional money ($20-$50) for the older operating system. LOL.
Anyway, this month I bought an additional 5 Windows XP OEM licenses from NewEgg.com to put on the shelf to cover future computer builds out past June 30 (I build many of the computers for myself and the company).
By the way, if you want a gauge on how Vista is doing, check out the right bar pn this page at Amazon.com. On the top 10 bestsellers (on June 18, 2008), XP occupies slots 2,4,6,7,9 while Vista is in slots 3,8 & 10. Note that is over 18 months after Vista was introduced to replace XP.
Arizona required emissions inspections of vehicles, but only for vehicles in the cities of Phoenix or Tucson. So, as you can imagine, they only have testing stations in Phoenix and Tucson.
Our company is headquartered in Phoenix. That is our legal address and the address on all our titles and registrations and licenses and such. Because all of our vehicle registrations show the company headquartered in Phoenix, then the state of Arizona treats all our trucks as being located in Phoenix. As a result, we are required to get emissions tests each year on about 20 vehicles.
But wait. None of our vehicles are actually in Phoenix. In fact, none have ever even crossed into this county. They are all in places like Flagstaff and Sedona and Payson that have no emissions requirements, and therefore, no testing locations. As a result, I am apparently required to, once a year, have all of our trucks driven to Phoenix for an emissions test that they are not actually required to have based on where they operate. In additions to the cost of the test itself, and any repairs mandated by the test, it costs us 400 miles x $0.55 per mile gas and depreciation plus 8 hours x $12 hour labor for the driver or $316 per vehicle to get them to the test site and back. A sort of annual pilgrimage to worship at the alter of mindless bureaucracy.
Recognize that none of this was obvious to me at 8AM this morning. I spent my entire morning not worrying about my 500 employees and not improving productivity and not pursuing some projects we are considering for expanded customer services, but trying to figure this situation out. All because some state legislators didn't realize that maybe corporate vehicle fleets are not necessarily registered in the location in which they are used.
I still think there must be a legal way to show my vehicle domiciled at one physical address but have the mailing address be my corporate office in Phoenix. But if there is, I have not found anyone who will admit it.
Apparently, the state of Arizona, fearing the coming old-folks demographic boom, is looking to create programs to keep older Americans working longer (and by extension off the government teat longer).
The thought of millions of boomers taking their early-retirement
benefits is causing concern about the stability of Social Security and
"We know not everybody is going to up and retire all at once," Starns
said, "and we will have younger workers coming in. But if you look at
all the demographics, there just won't be enough people to fill all the
jobs that could be vacant."
Add that possibility to existing shortages of workers in health-care
and other fields, she said, and "there could be some pretty significant
problems in society."
Arizona, which launched its Mature Workforce Initiative in 2005 to
avert such a crisis, was one of five states lauded last month for
efforts to engage people 50 and older in meaningful jobs and community
The San Francisco-based Civic Ventures think tank also cited
California, Maryland, New York and Massachusetts, saying the five
states recognize older workers as "an experience dividend," rather than
a drain on resources.
Of course, since it is government, the state of Arizona is, with one hand, patting itself on the back for instituting vague and meaningless but well publicized programs nominally targeted at this issue, while with the other taking steps that have real and substantial effects in exactly the opposite direction.
First, Arizona has some of the toughest laws in the country to penalize businesses for hiring, even accidentally, young vigorous immigrants who don't have all their government licenses in order. Young workers are pouring into this state every day, but Arizona is turning them away and locking them up.
Second, Arizona has been legislating as fast as it can to make it nearly impossible to hire older workers. I know, because the vast majority of my work force managing campgrounds is over 65. These workers tend to work for a free camp site plus minimum wage. They like the job despite the low pay because they get a place to park their RV and because the job is part time and very flexible in how they work (not to mention offers the opportunity to take whole chunks of the year off). I like these workers because they are experienced and reliable and paying them minimum wage helps offset their slowing productivity and higher workers comp costs as they age.
Here is the math: Older workers might work 30-50% slower than a younger worker (I have workers right now in their nineties!) They also have higher workers comp costs, maybe equating to as much as 10% of wages. This means that an older worker at the old minimum wage of $5.15 an hour might be financially equivalent to a younger worker making $9.50 an hour, which is about what we might have to pay for such a worker.
However, many states have implemented higher minimum wages with annual cost of living escalators. States like Oregon and Washington now have minimum wages over $9.00. At $9.00 an hour, an older worker is now financially equivalent to a younger worker making $16.50 an hour, well above what I can hire such a person for. This means that as minimum wages rise, I have to consider substituting younger workers for older but slower workers.
Last year, Arizona adopted just such a minimum wage system with annual escalators. Though we have not reached the point yet, the state soon may make it impossible economically to hire older workers. Already, we are looking at some automation projects to reduce headcount in certain places. This is sad to me, but in a business where a 12% rise in wages wipes out my entire profit, I have to think about these steps. I have to react to the fact that, no matter how many "policy advisers on aging" the state hires, in reality it is increasing the price to my company of older people's labor vis a vis younger workers.
This Tuesday, Arizona's death penalty goes into effect for businesses that knowingly hire workers who have not been licensed to work by the US Government. Employers must use the e-Verify system the Federal government has in place to confirm which human beings are allowed by the federal government to work in this country and which people businesses are not allowed to employ. Businesses that don't face loss of their business license (in itself a bit of government permission to perform consensual commerce I should not have to obtain).
There are any number of ironies in this law:
- The Arizona government has resisted applying the same tight standards to receipt of government benefits, meaning the state is more comfortable with immigrants seeking government handouts than gainful employment.
- The state of Arizona resists asking for any sort of ID from voters. This means that the official position of the state of Arizona is that it is less concerned about illegal immigrants voting and receiving benefits than it is about making sure these immigrants don't support themselves by working. This is exactly the opposite of what a sane proposal would look like. (and here)
- In the past, we have used Arizona drivers licenses to verify citizenship. By implementing this law, the Arizona Government has said that an Arizona driver's license is not sufficient proof of citizenship. Unable to maintain the integrity of their own system (e.g. the drivers license system) the state has effectively thrown up its hands and dumped the problem on employers
- The e-verify system, which the law requires businesses use, currently disappears in 11 months.
- The law requires that the e-Verify system be used for both current and new employees. It is, however, illegal under federal law to use the e-Verify system on current employees.
- In fact, the e-Verify system may only be used within 3 days of hire -- use it earlier or later, and one is violating the law. In a particular bit of comedy, it is illegal to use the e-Verify system to vet people in the hiring process. The government wants you to entirely complete the expensive hiring process before you find out the person is illegal to hire.
- There are apparently no new penalties for hiring illegal immigrants at your house (since there is no business license to lose). State legislators did not want to personally lose access to low-cost house cleaning and landscaping help. We're legislators for God sakes -- we aren't supposed to pay the cost of our dumb laws!
Update: Typical of the government, the e-Verify registration site is down right now.
Update #3: By the way, I guess I have never made my interest in this issue clear. We do not hire any illegal immigrants. Since most of our positions require employees to live on site in their own RV, it is seldom an issue since the average illegal immigrant does not own an RV. We have always done all of our I-9 homework, even though the government stopped auditing I-9's about 8 years ago. We have in fact been asked about five times by foreigners to hire them under the table without having the licenses and papers they need from the US government -- all of them have been Canadian.