California may be closed for business.
According to Jay MacDonald, former project manager of Chevron, up to five companies are leaving the state each week. In fact, California ranked the 48th friendliest state for entrepreneurship in the Small Business Survival Index, or SBSI.
In a 2009 study, Sacramento State University business professors Dennis H. Tootelian and Sanjay B. Varshney discovered that the total cost in this state annually due to direct, indirect, and induced costs of regulation is $492.99 billion, which is nearly five times the State’s general fund budget and nearly a third of its gross product. They said that this cost keeps 3.8 million jobs out of California.
Small business represents 99.2 percent of all employers in California and therefore has become the biggest target for regulations such as permits or licenses.
The total cost of California regulations on each small business in 2007 from getting permits, licenses, paying overhead, fees and property taxes averaged about $134,122 according to the study. Regulatory trends have only worsened and these numbers are likely higher now as a result.
When I was in Texas in the summer of 2011, I was astounded when I discovered that Texans didn’t need a license or a permit to start a small business.
Not long after discovering this, I found out that Texas is ranked the third friendliest state for entrepreneurship in the SBSI.
I am not praising Texas as an ideal model. In fact, they cut $4 billion out of education and laid off tens of thousands of teachers to bring their state budget “in the black.”
I am also, by no means, a right-winger. However, I don’t believe that more bureaucracy against working class people and small business is progressive.
The problem is that corporations go to lawmakers and lobby for regulations that stifle small business in order to prevent competition from rising.
Meanwhile, corporations get exempted from these rules and policies. According to the environmental news service Greenwire, the Obama administration exempted the Avenal Power Center, a proposed 600-megawatt power plant project in California, from the federal regulations on greenhouse gases and air pollution imposed on other power plants in early 2011.
Regulations are necessary to keep corporations from running rampant, but should not be used by these entities to crush small business.
It’s not about being on the left or the right on issues, it’s about what works.
