reprinted from October 9, 2003

  A free market is so simple... you and I make a deal that satisfies both of us. You have work and I need work. You pay me, I do the work, and we both profit from the exchange. You don't like my work, you boot me. I don't like my part of the deal, I quit. You find a better worker, you dump me and hire her. I find a better position, I quit and cut another deal. It ain't brain surgery... until government tinkering makes it complex.

Complexities. Group health insurance... tax preferences made it happen, and it has resulted in coverage made super-expensive by separating the user from the payments. Now we have the obscenity of employees afraid to quit their job because they'll lose their health coverage. That's not a benefit, it's a trap, and millions of workers put up with jobs they hate.

Complexities. Employers can't fire someone like me now... they might be guilty of age discrimination (over 40).  Their response? Don't hire me. Can't blame them. They also can't fail to offer me health coverage, which is higher for older employees. Another reason not to hire me. Can't blame them, given the rules. Notice that the regulations were supposedly put there to help people like me, but they cause the reverse to occur. Such is the effect of using force.

Complexities. Withholding. You hire me, you become responsible for withholding, and accounting for, and paying, my income taxes, my FICA taxes, and my Medicare taxes. You also have to match my tax for FICA and Medicare. That has to be calculated every time you pay me, and the calculations change every year. You become my tax collector. Don't try to figure this out from the IRS information ... you're going to need some payroll help. You might start here.

Complexities. ADA. Now that I'm your employee, your business has become infinitely more complex. If I have ANY sort of disability, visible or not, reasonable or not, I have rights under the Americans with Disabilities Act. If you're going to hire people, you had better study those rights, because they place you under a lot of obligations. The result of these protections can be so expensive that employers naturally shy away from handicapped applicants.

Complexities. OSHA. Occupational Safety and Health Administration. When you have employees, you have a "workplace" (nobody gives a whit about YOUR safety or health until you have employees), and now the rules become so arbitrary, silly, and expensive that you're just going to have to be lucky or hire a consultant.

This could go on, literally forever, because the laws and regulations are constantly changing, with new ones being added. What is the result of all this complexity?

One result is that most small businesses are not in compliance. They may know it... they may not. They're subject to a crackdown at any time... an inspector that decides to enforce a regulation you didn't know about. A complaint from someone that alerts government to look into your business. A complaint from a disgruntled ex-employee. The business is subject to having to make changes that may turn profit into loss. The business may have to spend a lot of unexpected money on changes they simply can't afford to make. For a small business, such things can easily mean closing the doors.

Another result is that such laws and regulations affect small businesses more seriously than large ones. A larger business can afford to have a couple of specialists on staff or retainer to insure compliance with thousands of laws and regulations... a small business simply can't afford it, so the owner is forced to not only run a business, but act as his or her own compliance specialist.

Perhaps the most destructive result of regulation is the effect on the poorest of our citizens. In our inner city, there is no shortage of needs... no shortage of business opportunities to provide needed services and products...  but the complexity of starting a small business can be completely overwhelming... so difficult, even with a great idea, that it makes a poor job or welfare look like the only reasonable choices.

Tomorrow, I'll introduce you to a remarkable libertarian organization in Chicago that is helping inner-city entrepreneurs overcome the barriers erected by government; barriers that very specifically help keep minority citizens from participating in the benefits of the free market.