Tuesday, November 20

Government Regulations and the Death of Business


I've recently read a couple of opinion pieces which dissect the reasons behind Mitt Romney's loss to Barack Obama in the last election. I've followed these columnists for years, and have agreed with a lot of things they say, but in this case, they're 180 degrees wrong. Both of these columnists think that the primary reason Romney lost the election was because he was a rich, evil banker, that he was part of the problem our country faces.

The fallacy of false association is obvious. However, there is a kernel of truth in this analysis. It isn't the fact that Romney is rich that is a problem. It isn't even that Romney controlled a large business. No, the problem stems from the attitude, promoted by the Democrat party and modern liberalism, that the world would be perfect if we could just remove the causes of greed. Romney didn't lose because he has a lot of money (so does Obama).  He lost because the Democrats have successfully ridden on the back of socialist dogma, fooling a lot of people into the perception that Mitt Romney was at the root cause of our nation's problems.

The difference between the two concepts is important. One side argues that Romney didn't win because he caused the economic problems we face in our country. I argue that Romney didn't win because the Democrats successfully painted Romney as an evil capitalist.

Of course Romney didn't cause the mortgage companies and the stock market to crash. Of course businesses in America aren't the evil institutions that the Democrats preach they are. Of course rich people aren't the root of all economic problems. Yes, some businesses do take advantage of others, but the United States has over 200 years of wealth building and prosperity precisely because the corporation works.

Let me paint a different problem and picture. Seven years ago, I started a corporation that used investment money (mostly my own) to help other businesses start selling public stock. My partners and I would trade our expertise, and some capital, for stock in companies that looked like they would really do well. Many of them prospered and grew into respectable corporations. When the company started to make a profit, we could sell off some stock and make a profit ourselves. The companies benefited by getting capital in order to expand business. We benefited by taking some investment income from the company. (Yes, by the way, I'm still a college professor.)

Our business opportunities ended in 2009. When the Obama administration started, and when the Nancy Pelosi Congress had a Democrat president to pass all its bills, the rules for corporations and public stock changed. The federal government tried to "fix" things. Little guys like me and my partners were left trying to figure out the new regulations. If we thought we found a method that would work, the Obama administration changed the rules. This happened time after time, until I finally gave up on providing venture capital and taking businesses public.

Here's the moral of the story. Most businesses in the US are just trying to make a profit and stay ahead of the game. The US government, however, under the "wise" leadership of Barack Obama, has adopted a socialist strategy of interference and regulation to the point that no one can reasonably determine the rules. Only those businesses which are then subsidized by the government tend to survive. Small businesses are getting killed off by the scores.

The federal government policies of regulation and interference have prolonged the poor economy and have limited small business opportunities that could have made a difference.

I'm not concerned about the dealings of big banks and big businesses. I applaud Mitt Romney for being able to make good investments during his lifetime. However, when the federal government actively stifles business, regulates all aspects of the corporation, enforces draconian rules, layers on impossible health care regulations, and in effect, does all it can to "help," businesses flounder, stagnate, and die.

Yet we have become brainwashed to believe that guys like Mitt Romney are the problem.

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