Regulation Deflation

The Statesboro City Council has overstepped its bounds with the passing of amendments to the city alcohol ordnances. In its efforts to curb the dangerous practice of alcohol abuse among younger college students, the city’s politicos have effectively overregulated local businesses and trampled individual rights in one fell swoop.
The new laws set forth pricing and quantity guidelines in relation to alcohol that have already claimed at least one casualty in the Courtyard Café, a small restaurant downtown. The establishment faced excessive fines after one of its employees unwittingly sold an undercover police officer two alcoholic beverages at one time. The owner, Becky Logan, said that she had to close the upstart business because she did not want to “wake up paranoid and go to bed paranoid” over the possibility of future fines.
The case of Ms. Logan and the Courtyard Café is a textbook example of the anti-growth atmosphere created by intrusive government regulation in the private sector. Our free market system can thrive only in an atmosphere of laissez faire capitalism. When the government begins to tell local proprietors that they can only sell so much of their product at certain times and at specific prices, then businesses must either use valuable capital in order to comply with the demands or forfeit even more capital to the government in fines. The result: a local economy full of paranoid Ms. Logans.
In order to gain a broader perspective on the problem of government overregulation, we must look at the U.S. economy as a whole. A recent Rochester Institute of Technology study revealed that compliance with government regulation costs the U.S. economy an astonishing $700 billion each year. Imagine how much more productive our economy could be, and how many more jobs could be created, if corporations did not have to spend capital on what essentially amounts to a “compliance tax”.
To make matters worse for Statesboro, the U.S. Small Business Administration’s Office of Advocacy concluded that businesses with fewer than twenty employees spend on average 56 percent more capital in compliance costs for each employee than do companies with more than 500 employees. Compliance costs hurt the small business owner the most.
Ronald Reagan once rightly said that “entrepreneurs and their small enterprises are responsible for almost all economic growth in the U.S.” His statement is supported by the S.B.A.’s recent findings that 99.7 percent of employer firms are considered small businesses. Half of America’s work force is employed in this sector, as are the vast majority of Statesboro residents.
In a city with a staggering 9.9 percent unemployment rate and one in which one fifth of its citizens live below the poverty line, the overregulation of business is bad policy.
As though the negative effects on the economy are not enough reason to resist this new legislation, individual rights must also be taken into consideration. The city fathers have yet to meaningfully correlate the regulation of alcohol prices to any kind of decrease in binge drinking. This is simply not the solution to the problem. Telling adults of the age of consent that they have to pay more for a beverage does not stop underage adults from the practice of binge drinking. Only a government could come up with such a lazy, yet seemingly expedient solution.
Greater police presence and sting operations have a much better chance of having some kind of an effect on the problem at hand.
These new laws might mean little more than a few extra dollars to most people in the Statesboro area, but to our economy full of Ms. Logans out there, the cost is much higher.


Sources:

"Local Business to Close Doors" -Luke Martin, Statesboro Herald, 12/07/05

"America Dragged Down - Harmful Economic Effects of Government Regulation" -Warren T. Brookes, National Review, 10/15/90

"Cost of Complying with Government Regulation Falls Heavily on Small Business" -Chris Sandlund, Entrepreneur, 3/15/05

American Factfinder - U.S. Census Bureau, www.census.gov

United States Small Business Administration online, www.sba.gov