Dr. Mary Ruwart Decrys Regulation of Small Business

Dr. Mary Ruwart, noted author with a Ph.D. in biophysics, addressed the Missouri-Kansas-Nebraska Libertarian Party Convention in KC on March 6 discussing how Liberty helps small business. More to the point, she explained how the lack of Liberty and excessive burden of regulation hinders small businesses, America’s engine of job creation.

Dr. Ruwart noted that 90% of net job creation from 1991-1995 came from small businesses with less than 100 employees. In the same period, 3.4 million jobs were lost from firms with more than 5000 employees while 3.8 million jobs were gained by those with 1-4 employees. Seventy percent of small businesses started in 1985 were still going nine years later.

Small businesses are the seed corn of jobs. If we consume it, it will be no more. Regrettably, government regulations are doing just that.

For these reasons, the Libertarian National Committee proposed a strategic initiative to court small business owners as our national constituency. Given the myriad of regulations on small business owners, it is clear why. After all, before they were big, giant businesses started small. Don’t forget Bill Gates.

John Stossel of ABC wanted to investigate regulations in various countries. He attempted to license Frisbee-selling businesses in Hong Kong, New York and India.

In Hong Kong, the paperwork took a few hours.

In New York, the process took several weeks to complete. 

In India, facing the prospect of the paperwork taking several years, he abandoned his efforts in order to complete the show in a reasonable amount of time.

“Why is India so poor?” Dr. Ruwart asked, “Because it’s so hard to even get started.”

Under president Reagan when regulations went down from 1980 to 1987, jobs went up. Later, when regulation reappeared, jobs declined, and the relationship was dramatic.

“Black businesses suffered the adverse impact of the increased regulation to a greater extent than others”, she added. The poor and disadvantaged are hurt the hardest, frequently more than double any others.

Dr. Ruwart decried the adverse effect of regulation she has seen in her own enterprises as an apartment owner. Inspectors once cited her for having ‘substandard kitchen counter lengths’ requiring her to extend the serviceable counters by five inches. The extra cost for this she had to pass on to her tenants. “But if I raise prices, my low-income tenants will have to move elsewhere”, she pleaded with the building inspector. “Good”, he replied, “Let ‘em go somewhere else.”

Two of her residents started businesses they ran out of their apartments. One person ran a day care business and the other person sewed curtains. Unfortunately, the apartment building was not zoned for businesses, and neither business had bought a city license. The city hounded them repeatedly and they both gave up. “It was just easier to go on welfare”, Dr. Ruwart explained, “so they did.”

“Regulators can condemn your building for peeling paint, but then force owners to rebuild to building standards and rip out walls to upgrade electrical and plumbing systems,” she explained. Dr. Ruwart herself left the business rather than work under such adverse conditions.

But there is light. The Institute for Justice, www.ij.org, is a group of Libertarian lawyers going to bat for small business owners and preserving their liberties. This includes:

• Essence Farmer, a 23-year old African hairbraider trying to earn an honest living braiding hair. The State of Arizona says she may not practice hair braiding unless she receives a government-issued license that requires 1,600 hours of training. Not one hour of this training actually teaches her to braid hair.

  Hairbraiding goes beyond a means of entrepreneurship; it is an important form of cultural expression. Natural hair care has grown into a multi-million dollar industry. Because it requires fairly little capital and modest training, in a free and open market the natural hair care industry would have unlimited potential to provide entrepreneurial and employment opportunities, as well as popular services and products to millions of consumers.

  The Institute for Justice is litigating this case in Phoenix. See http://www.ij.org/media/economic_liberty/az_hairbraiding/background.shtml

• After his mother-in-law’s funeral, Nathaniel Craigmiles spotted the same casket he had paid $3,200 for in Tennessee in a New York City showroom for only $800. He soon discovered the reason for the high cost of the casket in Tennessee: a state law created by funeral directors in the state requires that anyone selling a casket in Tennessee be a licensed funeral director.

  Outraged, Reverend Craigmiles opened a discount casket store offering discounts of 30 to 50 percent. But the politically powerful funeral home industry was quick to respond. After just one week, Tennessee’s Board of Funeral Directors and Embalmers, a seven-member agency comprised of six licensed funeral directors, served Craigmiles with an order to cease and desist selling caskets or risk being shut down, fined, and possibly sent to jail.

  The Institute for Justice filed suit in September 1999 on behalf of Craigmiles and three other casket sellers challenging the constitutionality of the funeral board’s licensing requirements.
  
  Eventually, the IJ prevailed and restored Reverend Craigmiles’ path to a productive livelihood free from the excessive government regulation. See

  http://www.ij.org/cases/economic/tenn_caskets.shtml

The irony of this regulation, Dr. Ruwart noted, is that politicians are claiming corporations are taking over America. It turns out, corporations are actually getting bigger through government regulation at the expense of small businesses.

In addition, consumers suffer too. Regulation causes prices to go up and services to go down.

Dr. Ruwart concluded that small businesses are hurt the hardest by regulation, and taxes do the same. Jobs are eliminated while prices increase. This sets the stage for less corporate diversity if not outright monopoly.

“Only Libertarians truly understand how to reverse this process and are actually doing something about it,” Dr. Ruwart stated. ”So let’s be proud to be a Libertarian!”