Stupid Regulations Can Make Starting A Business A Pain

The always insightful Matthew Yglesias (he even has his own Andrew Sullivan award category) rails against mindless regulations that made setting up his own small business a huge pain:

In the District of Columbia, I need to get a simple Basic Business License to rent out a single dwelling. After puzzling over the Department of Consumer and Regulatory Affairswebsite for a bit, it became clear that step No. 1 was actually to file form FR-500 with the Office of Tax and Revenue, which you can do online. Then it was time to hustle down to the DCRA (which closes at 4:30 p.m.) to file the paperwork. Once there, I learned that filing the FR-500 online wasn’t good enough—I needed a hard copy. Fortunately, the Office and Tax and Revenue was right across the street, so I went there and refiled. Then it was back to the DCRA to stand in line to get a number, wait for the number to be called, do some more paperwork, wait in another line for the cashier, fork over $100 in fees, then get a slip from the cashier to finalize the paperwork.

But then it turned out I needed to go to a third office, the Rental Accommodations Division of the Department of Housing and Community Development. It closes at 3:30 in the afternoon and required a 15-minute walk through a sketchy neighborhood. So the next morning I went down to that Rental Accommodations office to file a paper claiming exemption from D.C.’s rent control law.

He then goes on to make some important points. Someone who works a 9 to 5 would have a much harder time with this process that for Yglesias, was just annoying. The United States is also not as business friendly as we think: we rank 13th in the world for ease of start up. Canada ranks 3rd with only one step required as opposed to our six.

He then writes one of the most moderate things I’ve ever read on the topic of regulations:

Ideology aside, simply putting a little more thought into the process could make things much easier. Shifting as much form-filing as possible to the Web, where it can be accessed 24/7, wouldn’t undercut any legitimate regulatory purpose. In my case, since single-unit rentals are uniformly exempt from rent control in D.C., why should you have to go down to the rent control office to certify that fact? These convenience issues can easily slip through the political cracks. On any given day, it’s not an issue for the vast majority of people. And incumbent, already licensed businesses gain a minor advantage from making new entry difficult. But at a time when a rising tide of robots and other factors are pushing the wage share of the economy to historic lows, the ability to drop out of the workforce and go into business for yourself is more important than ever. And the option should be available to people from all walks of life, in our biggest and most prosperous markets.

Red tape, long lines, inconvenient office hours, and other logistical hassles probably won’t stop tomorrow’s super-genius from launching the next great billion-dollar company. But it’s a large and needless deterrent to the formation of the humble workaday firms that for many people are a path to autonomy and prosperity.

Regulations are necessary to a functioning market economy, but they should be simple and well thought out to avoid unintended consequences. One thing the left and right ought to be able to agree about concerning regulations: they should, at the very least, not be stupid.

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4 Responses to Stupid Regulations Can Make Starting A Business A Pain

  1. Well said. Interested in your opinion of Obamacare in relation to business activities.

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