Regulatory Thicket: Barrier to Small Business, or Political Bogeyman?

Posted by: John Tozzi on November 23, 2011

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We often hear about how much government regulation hurts business, and small business in particular. For example, here’s GOP Rep. Eric Cantor over the summer calling for repealing “job-destroying regulations,” a sentiment many of the Republican candidates for president echo. Republicans don’t have a monopoly on the complaint. President Obama, too, has pledged to ease regulations in the name of job creation.

So it’s interesting to read this Washington Post analysis of a new poll by the National Federation of Independent Business. The takeaway: most business owners who said regulation kept them from growing could not specify what regulation was the problem.

Of those who said regulations were a major growth impediment, only 36 percent identified a specific regulation or set of regulations that was responsible for their problems. Most of them (57.6 percent) instead blamed “a regulatory thicket” of rules — many of which they are not even aware of — for impeding their growth.

Regulation is a big umbrella. It covers everything from local zoning laws to aspects of health care reform to labor protections. And let’s be clear: it’s supposed to affect business, by balancing the interests of consumers, workers, and the environment with companies’ profit motives.

But because so many business owners who cite regulation as a problem can’t identify which rules get in their way, I wonder: How much of the grousing about regulation is political posturing, and how much is grounded in business owners’ real experience?

There’s no doubt some of both. For example, companies trying to raise money through crowdfunding can easily run into a tangle of securities laws. That’s a real regulatory barrier. It’s also one that I think businesses who run into it would identify specifically as an impediment, rather than some vague “thicket” of regulation.

Photograph by: Justin Fantl

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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