The Achilles Heel of Business

In Greek mythology Achilles was the strongest and bravest warrior of his time.   When he was born, his mother, Thetis, dipped him in the River Styx which had the power to make a person invincible.  However, there was one remaining weakness on his body- the spot above his heel that his mother had held him by while dipping him in that sacred river.  Even though the rest of his body was fierce and indestructible, his enemies eventually figured out this weakness.  They used this knowledge to kill him by shooting an arrow into what is now called his, “Achilles heel.”  Since then, an Achilles heel has been defined as a weakness that could potentially become fatal.   Although the origin of the term referred to a physical vulnerability in the tendon connecting the lower leg and heel, today it is also used metaphorically to describe specific attributes or traits that can lead to a tragic downfall of a person, group, business, or even a country.

American businesses are, in a sense, much like Achilles. Entrepreneurs have the freedom to start up a business doing practically anything they want because America is a strong nation that encourages this kind of creativity and ingenuity.  Once companies are established and have a loyal customer base, they can remain strong so long as they stay competitive and are constantly looking for more ways to deliver the best products and services available.  However, these businesses still face a very threatening Achilles heel that threatens their very survival- federal regulations.

Now, just to be clear, regulations having to do directly with safety and common sense things do not pose a threat to business.  In fact, these are extremely valuable things.  But the truth is, most companies would adopt these regulations regardless of whether or not the government enforced them.  Why?  If a company has a lousy or unsafe product, consumers will either refuse to purchase it, which puts the company out of business, or sue the company into bankruptcy.  The focus of this segment will be on the overreaching and absurd regulations that impede and sometimes prohibit the progress, success, and profits of business.

Think about some noteworthy facts:

  • The Code of Federal Regulations, which lists all existing regulations, made it to an astounding 163,333 pages in 2009.
  • The Federal Register, which reports any changes in federal regulations of businesses, is currently 68,598 pages long
  • Compliance with all of these regulations cost an estimated $1.75 trillion, more than what all Americans combined pay in federal income taxes.
  • Each household’s “tab” for regulation expenses? $15,000 or, about the same as what most people pay for housing each year.
  • There are more than 50 federal agencies in charge of overseeing regulation that vary from the Animal and Plant Health Inspection Service to the EPA to the Bureau of Customs.
  • The number of federal regulators has tripled over the past 50 years in order to keep up with the ballooning size of the government.  During the President George W. Bush’s administration, a whooping 91,000 staff members were added to federal regulating agencies and bureaus.

Something must be done to control this beast.  Each new regulation places additional stumbling blocks and costs more time and money to both businesses and consumers.   When a group of 13-year old boys are turned into the cops for selling cupcakes without a government regulated license, or the price for obtaining a license to operate a single taxi in New York City has jumped to $600,000, you know things have gone way too far.  Instead of looking for ways to ease the pains of business, the Obama administration now has a firm record for doing just the opposite.

Don't you even think about making some money on the side by selling cupcakes. Unless, of course, you apply for a permit first!

Here are just a few examples:

  • In the new health care reform bill, there is a certain regulation that has caused uproar amongst businesses.  This is known as the “1099 Provision.” It requires companies to do an IRS report for every transaction they make over $600 which, for any decent size company, happens to be a lot.  Clearly, this places an  unnecessary burden upon employers costing additional time and money- time and money that could be used to hire more people, perhaps.
  • First Lady Michelle Obama wants to make a legacy of fighting obesity by reminding us all that, “Dessert is not a right.” Some cities like Boston, New York and San Francisco have begun banning the sale of soda or high-calorie snacks on city property.  These regulations, no doubt, have a negative effect on all companies that used to sell their products there.  Not to mention limiting the personal choice of individuals on whether or not they want to consume such things.
  • The government is now looking to update all ADA requirements (Americans with Disabilities Act) so that businesses and cyberspace are more compliant.  These new proposals go far beyond the original, much needed, regulations such as wheelchair ramps.  New regulations would require things such as mounting screens on the backs of chairs in movie theaters that would enable deaf people to read the movie’s captions.  No exact cost for all of these proposed regulations has been announced, but it has been estimated to be at least several hundred million dollars.
  • In the proposed Food Modernization Act, the Federal Department of Agriculture (yet another federal regulatory agency) would expand its influence by being able to dictate how and what farmers grow on their fields.  New regulations and more oversight would, of course, mean more costs for inspections, and more staffers added to the government payroll.

Unfortunately, neither President Obama nor his top advisors and aides have any authentic private sector experience.  His administration has been seriously scrutinized for this, especially recently in light of the midterm elections.  Working for the government and running a business are two very different things.  In a business, there is a bottom line.  In the government, you can print more money or borrow from future generations not even born yet.  If those tactics were used by companies it would be called fraud The real world and the world in which our federal government prefers to live are on opposite ends of the spectrum.  Because of innovation in technology, businesses have been able to do more things with less and cheaper.  The trend for them has been decentralization.  The federal government, however, is constantly seeking more power by increasing their influence in anything from education to the environment, creating another bureaucracy to deal with and clean up an existing bureaucracy, appointing “czars” to oversee everything, and trying to centralize all aspects of private life.  It doesn’t take a nuclear physicist to realize why this ends up becoming a complicated and outrageously expensive mess.

Government is meant to be an objective referee for business, not a tyrannical dictator.  What needs to be done is a total analysis of all existing regulations.  The group that is given this task should not be one of those “bipartisan committees” filled with current or former lawmakers.  It must consist of businessmen and woman, not those who spent their entire lives in Washington D.C. and do not actually know to efficiently run a company.  Our economy will continue to stagnate while innovation is stifled, and efficiency crushed due to the perpetually expanding federal red tape.  The freedom-robbing of excessive regulation must end.

Final memo to the federal government: Quit stabbing our Achilles heel or it will kill us.  Promise.

(This is the second segment in a 10-part series from my personal blog.)