I can't say for certain that my experiences make me more or less capable of understanding the problems with the economy, nor have I conducted any studies on the subject. But what I am aware of in my particular industry (construction - one which involves many small businesses and is one of the hardest hit by the recession), is that the barriers to entry and the costs forced upon us by governmental control are tremendous.
To operate as, say, a carpenter in California, you have to have a contractor's license, a contractor's bond, workers compensation, you must make contributions to the EDD, and you have to do all of this in addition to normal employee payroll, withholding, and etc. Thus, the cost per employee is so high that a new hire may actually cost the employer twice what the employee physically takes home.
One can, of course, make a good argument for any one of these programs. EDD provides a safety net for employees. Workers comp. protects employees from going under financially due to injury. Contractor's bonds insure customers against fraud and shoddy workmanship, while the license stipulates a certain standard of ability.
The problem arises in the fact that all of these costs make hiring a licensed carpenter very expensive. In lieu of this, then, people will do the work themselves, let things go, or, very often, hire an unlicensed carpenter with a few buddies. The law-abiding and conscientious contractor then has to fire employees and simply work longer himself. Perhaps he may just go out of business altogether.
Although the Contractors Board makes a show of trying to crack down on illegal contractors, I would estimate that one half to two thirds of total residential construction work in California is performed by unlicensed workers. These illegal operators can and do perform satisfactory jobs, often work alone, and make far more profit (untaxed!) then a licensed and hard working contractor, and their numbers make enforcement of contracting laws a virtual impossibility.
My point is this: even if every individual regulation is good, at a certain point the weight of policies and regulations makes disregard for the law worthwhile. And while some people may choose to still be law abiding (as my company is), they are penalized for it.
But suppose that enforcement did work? Despite the astronomical cost of such policing, even were unlicensed contractors to be eliminated, we would likely not see much more work. Most people simply cannot afford the price of our services, which is dictated in large part by labor costs. Given the costs we must pay to employ even a laborer - much less a journeyman - there is a point beyond which doing a job actually costs the company money. So, every regulation (a term I am using loosely) placed upon us results in less business overall.
This might not be quite as bad as it is if those who authored such regulations had any conception of the realities of daily business operation in the market. As it is, we often receive plans or lists detailing prevailing wages (prevailing wage is what the government thinks people are being paid for a service in a particular area) according to our enlightened overlords. If a company were to operate using these wage standards, they would go bankrupt in less than a year. At my company, we like to read these lists in a sarcastic frame of mind while commenting on the idiocy of those who propose them.
How can a small business survive, then? Well, at my company, my partner and I work about 60 hours a week each, much of which is hard physical labor (when doing paperwork, we may hit 80 hours a week). I've gone as high as 96 hours in a week, with less to show for it then most.
This isn't a political or economic rant. I'm coming at this from an informal, anecdotal perspective. But I must say that it seems difficult for me to place blame for these conditions upon free markets - we don't operate in one - or even big companies. If we didn't have very cooperative and interested companies supplying us products, samples of new items, and even free clothing, things would be even more difficult. I am well aware that not every company is like that, but the ones that screw us over are invariably the ones the government requires us to deal with.
Those who seem to truly have no connection with reality or sympathy with our efforts are those ensconced in the halls of power, as it were. Rules seem to be made without any consideration of the effects they will have or the additional burden they will impose. Indeed, the attitude prevailing seems to be that we ought to be grateful for being allowed to exist at all. In many ways, the perception is growing both amongst the management and employees of my company that the rules have been carefully constructed to force us to run as fast as we can to stay in the same place.
This sense of futility, and of being exploited, tends to produce a deep and bitter anger. The sense, the feeling, is not that the system does not work, but that it has become a malevolent system, designed to consume us. It is that the welfare state has become adjusted to provide for the welfare of those who run it or collude with those administrators - and all the while, those of us trying to attain to a certain stability, a bit of financial security, are to be forever enticed by it, but forever denied.
This sort of mood will not lead to good things. But the reaction I have seen, so far, seems to either have been an agitation against social liberalism (as if banning gay marriage will make my life better), useless agonizing over how much Warren Buffet makes (even if we confiscated everything the "super-rich" earn, my life would be not a whit improved) or outright condemnation of people like me, people who are trying to make money by earning it.
I'm a pessimist. I don't think that things are going to improve for those of us who work or want to work. I think the solipsistic radicals will continue to smash windows, the Republicans will continue to tout fundamentalism and weird tax schemes (selected to be so weird they will never be implemented), and the Democrats will continue implement more and more burdensome regulations while demanding higher taxes on those who invest or earn. In short, none of those who are in a position to fix real problems wish those real problems to be fixed. The problems grant them power, job security, and something with which to demonize their opponents.
As for me, at least the long hours give me time to listen to Dostoyevsky, Dawkins, Wodehouse, and others on my iPod.
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Topic: Occupy Wallstreet (Read 35848 times)