# How regulation creates poverty, and divides the classes.



## MASSDRIVER (Jan 17, 2015)

So as not to completely derail another thread;

Referencing business regulations, creating a powerful administrative class is a natural divider of the classes. On the one hand, there are large and powerful entities that have the resources to understand and exploit regulations. They can pour money and effort into the study and implementation of said regulations to their benefit. On the chance they run afoul and are fined, they simply pass that cost to consumers.

What that does is create a disadvantage to those operating in the same arena, but on a much smaller scale. Those businesses lack the resources such as lawyers, human resources departments, or outside consultants to properly understand the regulations they are subject to. Furthermore, should they not comply in some fashion, any penalty can be potentially fatal to the operation.

That leaves the poor. This is a group that are doing business, in general, of the grid. There are no licences, permits, or for that matter, proof they ARE doing business. This is highly exacerbated when you have a population artificially magnified by illegal undocumented people.

Any money being made by the "business owner" is by a large percentage funneled back into the parent country, while those that are exploited by them are paid subsistence at best.

At the same time, any legal citizenry gets shoved out of the occupation they are in, and in the current iteration are either on government doles, or working far below current station.

This naturally, and automatically, divides and deepens the rift between rich and the poor.

Large concerns exploit and thrive under the regulation umbrella, smaller legitimate concerns buckle under the strain trying to keep up, that allows the larger concerns to absorb that clientele, all the while allowing the low grade "black market" to subside on those that cannot afford any middle ground, reasonable product.

The place for the legitimate small business is being squeezed out of the picture.

In the case of construction,  those that thrive have to have storefronts, secretaries, accountants, retained legal, maybe a controller, and the field staff to support all that overhead. So only upper-middle class on up can afford their services.

Meanwhile, that leaves, in general, the scraps and clients you want nothing to do with (like flippers) that hit the Home Depot Unemployment Office and take advantage of those conditions. They can treat those people like servants because they don't want trouble with the law.

Now things may change and probably get worse the more we welcome in illegals, but that's how it works now.

There is an obvious and glaring reason the middle class is disappearing.

Brent.


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## mjesse (Jan 19, 2015)

You make many good points, and I agree with your general ideas.

The following line is one, I think, too many people misunderstand or don't even see...



			
				MASSDRIVER said:
			
		

> The place for the legitimate small business is being squeezed out of the picture.


This should be a bigger concern for all Americans.

Gone are the days when you could just "hang out a shingle" and become a legitimate businessperson in pursuit of the American dream. By the time you are through navigating the maze of licensing, insurance, tax law, corporate entity filings, et.al., you've forgotten the reason you originally started the venture.

Leaving room for only "off-grid" or big bank-rolled business is bad for all the reasons you mention.

.

I wish more people could understand it.


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## jar546 (Jan 19, 2015)

I've started several small business, some of which I still keep today and never had an issue.  A solid business plan with a good work ethic is the main factor.  The rest of what you mention is simply incidental.  Too many excuses as to why businesses fail from the owners rather than looking at themselves.  I wish people would stop being so negative, always looking for excuses and playing the victim.  Sometimes you just have to step up to the plate and be prepared for what you want to do.


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## ICE (Jan 19, 2015)

jar546 said:
			
		

> I've started several small business, some of which I still keep today and never had an issue.


The type of enterprise, the location, the political climate, the attention of the competition....these all make a difference.  In Pennsyltucky if you have a pencil you too can be a contractor..... a pair of pliers and you're a dentist.

Well that may be a stretch but you get the idea.  In California a contractor is required to have a license, insurance, sensitivity training and an awareness of the protected classes.... a dentist needs an autoclave to keep the pliers clean.

It's not just the rules but also the cost to keep up with them. I recall a pre-job meeting that broke down after a CAL-OSHA expert went on for 45 minutes.  I came away from it thinking that I wouldn't attempt building these 200 houses.  The contractor must have to hire someone to constantly canvass the job to make sure that everyone is smothered in bubble wrap.

Like you, I have been in business.  I started a few from scratch and bought a few more.  I watched regulations compound over the years.  The EPA tossed wrenches in every direction.  ADA forces many into a tailspin.  Fish&Game gets into the act.  What was never a problem suddenly requires $1,000,000.00 liability policy.... that doesn't even indemnify you.  The tax dilemma, Obama care, clean water act, child slavery laws, family leave, record keeping to the nth degree.... it reaches a point where all you need to own a business is a key to the door because everything else is thought out for you.  Trouble is, you might not know what all's involved and that dooms many business attempts.

So Jeff, it is a different set of circumstances here in California.  What flew 20 years ago won't get off the ground today.  Doggone, in California, the porn industry is required to use condoms.  When lawmakers got all the way to that, you've got to figure that they covered everything else.


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## MASSDRIVER (Jan 19, 2015)

It has nothing to do do with negativity. I have had my business, and done well, and somehow managed to keep it alive during one of the worst economic times in this state, albet in skeleton form. Through bad clients and some administrative action. But it's not just me, or this type of work. It is a common theme here and has driven people away that could not grow.

But that's neither here nor there.

Ice asked how I thought OVER regulation is dividing rich from poor and decimating the guy in the middle. This was my explanation.


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## Mark K (Jan 20, 2015)

I get the impression that if we extend the logic of the argument that we should get rid of building regulations.


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## jar546 (Jan 20, 2015)

So this is a California specific issue?


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## mtlogcabin (Jan 20, 2015)

Mark K said:
			
		

> I get the impression that if we extend the logic of the argument that we should get rid of building regulations.


Yes some of the code sections should be eliminated. We could make a list as to our pet peeves.

Here is my number one from the mechanical code

1101.10 Locking access port caps.

Refrigerant circuit access ports located outdoors shall be fitted with locking-type tamper-resistant caps or shall be otherwise secured to prevent unauthorized access.


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## Paul Sweet (Jan 20, 2015)

I just came across this quote taken from Thomas Jefferson's inaugural address:

"Still one thing more, fellow citizens -- a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government, and this is necessary to close the circle of our felicities."

http://ahp.gatech.edu/jefferson_inaug_1801.html

It's too bad that so many have lost sight of this over the past two centuries.


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## JBI (Jan 20, 2015)

The blame only belongs to the regulatory scheme when the powerful special interests (those large corporations) are allowed to putrefy the process by buying legislators to write regulations that are favorable to them (over their smaller competitors). JMHO.


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## mtlogcabin (Jan 20, 2015)

JBI said:
			
		

> The blame only belongs to the regulatory scheme when the powerful special interests (those large corporations) are allowed to putrefy the process by buying legislators to write regulations that are favorable to them (over their smaller competitors). JMHO.


Or environmental groups using the courts over the people who actually live in the area and make a living from the product.

Loggers, miners, drillers, fishermen, farmers to name a few.

Remember environmental groups are large corporations also who are usually financed by those who stand to make a lot of money one way or another.

The link below is a prime example. Fund the environmental groups suing to block a pipeline, buy the railroad to transport the oil out and the materials back. Recently he just bought a large number (147,000) of shares of TransCanada as it looks like the company will be breaking up the pipeline portion from under the umbrella of the utilities which they own.

http://news.investors.com/ibd-editorials/111611-591960-billionaire-buffetts-bakken-boom.htm

http://www.fool.ca/2014/12/05/billionaire-george-soros-bought-147000-shares-of-transcanada-corporation-should-you-buy-too/


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## steveray (Jan 20, 2015)

Follow the money...


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