Small firms say regulation is fastest-growing concern
It’s been exactly three and a half years since Barack Obama was inaugurated, and here are two things that folks on the left have been saying about the economy every day since then: It’s Bush’s fault, and the problem is a lack of aggregate demand.
Here’s what small businesses have to say about the situation:
Chart by Dan Clifton at Strategas Research, via the AEIdeas blog
Keeping in mind that these are what small firms are “most concerned” about, meaning many likely have concerns to varying degrees about all three, a few things jump out at me:
1. In 2005, these three concerns accounted for a little more than one-third of small firms’ biggest worries. Today, they combine for about 60 percent. That suggests to me that these firms have less time and energy to devote to specific concerns about growing their business.
2. After shooting to the top in the second half of 2008, concerns about sales plateaued for about two years. Those concerns have been falling pretty steadily for the past year and a half.
3. Concerns about regulation, which more or less mirrored those about sales from 2005 to the start of 2008, began a steady ascent in 2009 and have almost doubled since then.
4. Concerns about taxes have remained fairly steady over these years.
5. At the beginning of 2009, the sum of concerns about regulation and those about sales was in the neighborhood of 40 percent — pretty much the same as today. But the division between them is starkly different: Whereas there were three small firms concerned about sales for every one worried about regulation then, now the two are dead even. In other words, worries about sales have been gradually replaced by worries about regulation.
6. If current trend lines continue, both taxes and regulation will soon rank higher among small firms’ concerns than sales.
Even if one wants to credit Obama’s “stimulus” package with the decrease in worries about sales — totally ignoring the effects of the Federal Reserve’s ultra-loose monetary policy — this graph clearly shows why improved demand hasn’t shifted the economy out of neutral: Increased regulation has stifled the recovery we might have had.
Small firms are generally credited with the bulk of job creation in this country. So the question this information puts to voters is: Which candidate do you expect to do more about the most pressing problems faced by small firms — Barack Obama or Mitt Romney?
– By Kyle Wingfield
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575 comments Add your comment
ByteMe
July 20th, 2012
12:36 pm
I hear this meme repeated constantly on Fox but is argument always seems to lack specific regulations. Can someone enlighten?
It’s called “propaganda” and the low-information fools lap it up so that Fox can keep selling ad time for tampons and overpriced gold bullion.
Hillbilly D
July 20th, 2012
12:36 pm
Byte Me
I see Regulation as red, taxes as bluish/purple and sales as black. I reckon everybody sees different, which I reckon is what keeps blogs going.
ByteMe
July 20th, 2012
12:38 pm
The data presented reinforces the idea that uncertainty is a job killer.
Let me know when business success or external conditions are a certainty. Oh, that’s right: never.
Bruno
July 20th, 2012
12:38 pm
When you have the uncertainty of Obamacare looming, the always unaccommodating EPA, and the ever-present pressure of the IRS, there’s no doubt why this so-called “recovery” is as weak as it is.
To be fair, Ti, the most significant factor affecting the slow recovery is the anemic recovery of the housing market/construction industry. Which is to be expected when considering the vast oversupply of both residential and commercial properties we still have. This has caused a ripple effect into all sectors, and can only be remedied by time. There’s no magic correction that we simply haven’t stumbled upon or invented, a lesson that Obama and the Keynesian economists don’t seem to understand.
Having said that, I don’t see Obama as any type of “steadying hand” for our economy. As he made clear in his first two years in office, he places Utopian social goals at the top of his To-Do list, with predictable results. Doing nothing would have been far preferable IMO.
Tiberius - pulling the tail of the left AND right when needed
July 20th, 2012
12:39 pm
Filter, in case you missed it, government is all around you.
From the regulations on drugs that cause the cost of them to skyrocket, driving up health care costs, to OSHA regulations on virtually everything from exacting heights of electrical outlets to the type of ladder you have to buy, to virtually every other facet of running a business, and woe be unto you if you don’t follow them to the letter.
The studies are out there for you to read. Find them.
ByteMe
July 20th, 2012
12:40 pm
Hillbilly: sales is a dark green with what look to be black deltas. RGB on the line is #07340B. Check your monitor.
Bruno
July 20th, 2012
12:41 pm
Hey Poor Boy From Alabama!! Great to see you hanging around the Wingfield Blog!! Come by more often, you always have a lot to say.
Poor Boy from Alabama
July 20th, 2012
12:43 pm
Bruno,
Thanks for the kind words!
JamVet
July 20th, 2012
12:43 pm
Says the woman who has obsessed over me for nearly five years.
Too funny…
“Can someone give me a list of say, about 10 regulations that are actively strangling small business.”
I’ve asked this question before and have yet to ever get an intelligent, empirically verifiable list. I’d settle for two or three.
And the laugher is that it would be real easy to come up with. Because they certainly exist
But when basic research is a bane (is that word allowed anymore, Mr. Limbaugh?!) to the neocons, all one can expect is talking points compeletly bereft of facts, specifics, evidence, data, links or proof.
(And blank stares do not count!)
ByteMe
July 20th, 2012
12:44 pm
There’s no magic correction that we simply haven’t stumbled upon or invented, a lesson that Obama and the Keynesian economists don’t seem to understand.
There is, but both parties blew it in 2009-2010. They should have thrown huge amounts into anything that would have built something we need (like a better electrical grid) that would put construction workers to work. Not tax breaks for people who didn’t need them, but honest to goodness non-outsourceable projects that would employ the people with job skills that no longer had a place to go. Something gets built we need, people are employed and can pay taxes and be good consumers, everything’s good.
Yes, it’s Keynesian. So is Keynes’ statement that when times are good, you do everything you can to reduce government spending. People forget that part.
Get Real
July 20th, 2012
12:45 pm
ByteMe….can you enlighten us as to how you are running your small business since you seem to disagree with other small business owners.
ByteMe
July 20th, 2012
12:47 pm
ByteMe….can you enlighten us as to how you are running your small business since you seem to disagree with other small business owners.
Hard to imagine, isn’t it
See my comments above about how Kyle substituted “NFIB members” with the puffed up “small businesses”.
Hillbilly D
July 20th, 2012
12:48 pm
Byte Me @ 12:40
My eyes just ain’t seeing green. If it is green, they should’ve gone with a shade that offered more contrast, in my humble opinion.
Bruno @ 12:38
That’s a good point. In my opinion, they need to be figuring out something to base the economy on other than housing, consumerism and other things that depend on perpetual expansion (usually at a rapid rate). I don’t think either side has figured out that we’re in a long, slow decline and that’s the reality you have to deal with.
Poor Boy from Alabama
July 20th, 2012
12:49 pm
JamVet,
The Business Roundtable sent Team Obama a long memo about the various policies and regulations that were inhibiting growth back in June of 2010.
businessroundtable.org/news-center/business-roundtable-letter-to-the-white-house-on-policy-burdens-inhibi/
The memo is 54 pages long and available for download.
While the Business Roundtable represents big companies, most of the things they talked about affect smaller firms too.
tiredofIT
July 20th, 2012
12:50 pm
Some say that these small business owners spend to much time with Rush and Sean and not enough time running their businesses.
Tiberius - pulling the tail of the left AND right when needed
July 20th, 2012
12:51 pm
“There is, but both parties blew it in 2009-2010. They should have thrown huge amounts into anything that would have built something we need (like a better electrical grid) that would put construction workers to work.”
Stimulus 1 and follow-on mini Stimuli just aren’t enough?
I know. Who cares about 1/3rd of our total national debt being generated in 3 years, right?
Hillbilly D
July 20th, 2012
12:51 pm
Yes, it’s Keynesian. So is Keynes’ statement that when times are good, you do everything you can to reduce government spending. People forget that part.
That’s another good point. Most Keynesians (if that’s the right term) only follow half of the equation. It’s the same basic principle as the Biblical seven years of plenty and seven years of famine. It only works if you put up during the seven years of plenty. It’s hard to get through the seven years of famine, if you didn’t hold anything back during the seven years of plenty.
ByteMe
July 20th, 2012
12:55 pm
Stimulus 1 and follow-on mini Stimuli just aren’t enough?
Half the stimulus was wasted on tax cuts, which don’t put anyone to work. A whole bunch more went to the states to keep teachers employed. Completely misdirected actions on everyone’s part (and that includes the Republicans who damned it on one hand, while having their other hand out taking it the money).
Most Keynesians (if that’s the right term) only follow half of the equation.
You should say that most politicians follow half the equation, because that’s the half that gets them re-elected. Taking away the punch bowl doesn’t make you a favorite at the party.
I'm a liberal and believe everything I read and nothing the other side comes up with...cause we're smart and they are not
July 20th, 2012
12:56 pm
I own a small to mid size company. We have gone from 208 employees to 135 since Obama was sworn in. No, I don’t blame him for everything. I do blame him for an ideology that believes we can tax our way out of this and that government is the answer……and he is Hell bent on that belief. I’m a S corp and 4 years ago paid 1.5 million dollars in federal taxes. Last year I paid 400,000. Follow the math, that’s 1.1 million less. Obama is concerned about getting my top rate to 39.5 from 35% . At my current income level in this economy, that’s an extra 20,000 or so in additional taxes. Wow…….Why doesn’t he have the mind set to say, ” we need to get this company back to healthy so this company is back to paying 1.5 million in taxes rather than focus on the extra 4.5 %. He truly doesn’t get it. Robust companies in robust economies fill the treasury and the hiring. His ideology is killing us. That’s why the term ” it’s the economy stupid” is so true.
Jefferson
July 20th, 2012
12:56 pm
It will get worse if the failed policies of 2000-2008 are put back into place.
Get Real
July 20th, 2012
12:57 pm
ByteMe….none responsive, you still have not enlightened us on the small business you own and run. It really does not matter if deflect again or not as I believe everyone already knows the answer
Filter
July 20th, 2012
12:58 pm
Tiberious,
I repeat, That really didn’t answer my question, now did it. We’ve always had regulation in this country. What I want to see is a short list of economy strangling regulations brought into being by the Obama administration.
If this is such an important issue then it should be a simple matter of just typing them out.
You know
1.
2.
3.
etc
Get Real
July 20th, 2012
12:59 pm
I’m a liberal and believe everything I read and nothing the other side comes up with…cause we’re smart and they are not
maybe ByteMe can give you some pointers on how he runs his company
JamVet
July 20th, 2012
1:01 pm
Poor Boy, thanks for that info. I will look at it when I get a chance.
As a small business owner, I am somewhat aware of the effect of regulations – both good and bad.
Unlike the government haters here, I realize that had the free market operated ethically, morally and legally, many of these regulations would not exist.
But the banksters, casino capitalists and the Wall Street Titans of Malfeasance and Criminal Negligence have proven over and over and over again, that they simply cannot be trusted to do the right things for their clients, employees, shareholders, vendors, communities and certainly not the nation.
Corporate crime has turned into an avalanche and the Uncle Sam haters blame the cops and not the criminals for it…
Tiberius - pulling the tail of the left AND right when needed
July 20th, 2012
1:01 pm
“Half the stimulus was wasted on tax cuts, which don’t put anyone to work. A whole bunch more went to the states to keep teachers employed. Completely misdirected actions on everyone’s part ”
Am I reading this right, ByteMe?
Have you finally come around to the notion that the Stimulus was a failure?
ByteMe
July 20th, 2012
1:02 pm
ByteMe….none responsive, you still have not enlightened us on the small business you own and run. It really does not matter if deflect again or not as I believe everyone already knows the answer
Ooohh, we have ourselves a stalker! Whoo-hoo!! I’m the popular guy now!! Take THAT, JamVet!
I already said what I said. You just have to read it.
Tiberius - pulling the tail of the left AND right when needed
July 20th, 2012
1:03 pm
Well, I see AmVet has manged to get in all the requisite keywords to receive his compensation from the DNC this afternoon.
BW
July 20th, 2012
1:03 pm
@@
I was being sarcastic.
I'm a liberal and believe everything I read and nothing the other side comes up with...cause we're smart and they are not
July 20th, 2012
1:04 pm
One only needs to google ” new OSHA mandates to get a good start. I’m living it.
ByteMe
July 20th, 2012
1:05 pm
Have you finally come around to the notion that the Stimulus was a failure?
Did I say that? Nope. I said they wasted the opportunity.
TARP was the right answer, but initially applied wrong (with no controls). The concept of stimulus into falling demand is absolutely correct… if you do something to actually help increase demand. Only part of the stimulus helped demand… the rest was about treading water, which made it a waste.
Jefferson
July 20th, 2012
1:07 pm
We wouldn’t need jails if they were not any outlaws, this is why we need regulations because of the crooks. If you police yourselves, you wouldn’t need police.
Darwin
July 20th, 2012
1:07 pm
So what? What specific regulations are they talking about? Small firms always complain about government regulations. And there are those small business people who actually tell the truth – it’s all about demand.
ByteMe
July 20th, 2012
1:09 pm
Off to forage. Hope you all have a pleasant afternoon.
Tiberius - pulling the tail of the left AND right when needed
July 20th, 2012
1:10 pm
So you’re saying that the goal of the stimulus (to affect demand) was not met, yet you’re not going to call it a failure, ByteMe?
Got it.
I'm a liberal and believe everything I read and nothing the other side comes up with...cause we're smart and they are not
July 20th, 2012
1:12 pm
For the person asking for new federal regulations ( just give me 10) start with the new NFPA 70 E OSHA ( National fire protection Assoc) Standards and the new OSHA 30 hour hour mandatory training. We’ll start with these simple 40 -50 requirements.
Bruno
July 20th, 2012
1:12 pm
They should have thrown huge amounts into anything that would have built something we need (like a better electrical grid) that would put construction workers to work.
ByteMe–The problem with economic theories is that there is no truly scientific way to test them insofar as you never have a “control group” against which you can compare outcomes. In other words, you can’t simply divide the country in half and apply different economic theories and see which one works best. In the end, there are a myriad of factors which affect our economy, some under our control and others not. As such, we can only rely on faith and gut instinct inorder to decide if a particular economic policy is effective.
In terms of Keynesian economics, we do have a body of evidence by which to judge it–the Great Depression. Although die-hard Roosevelt fans will claim that he pulled us out of the Depression with all of the government spending, there are just as many on the other side that believe his policies extended it. Personally, I don’t think “make-work” projects have much value, since all they do is add to the debt.
Poor Boy from Alabama
July 20th, 2012
1:18 pm
JamVet,
You’re welcome.
There’s no doubt that we need laws and regulations just to keep society functioning. Things would be chaotic without them. The problem is that we often get bad laws and regulations from folks who don’t seem to know or care how burdensome they are. Big companies often like these clunky rules because they stifle innovation and make it harder for new firms to grow. Take a look at the SBA report I reference previously. The annual cost of federal regulatory compliance is $10,585 per employee for firms with less than 20 workers vs. $7,755 per employee for companies with more than 500 workers. Those kinds of differentials can really hurt small businesses. .
hatorade drinker
July 20th, 2012
1:20 pm
Kyle, what are your thoughts on the LIBOR scam? do you think banks should be self-regulating?
wonder why you are silent on this
Hillbilly D
July 20th, 2012
1:21 pm
If you police yourselves, you wouldn’t need police.
That’s the way we used to do it up here in the Hills. Folks called us backwards, though. It worked as well as what we have now, if not better.
As such, we can only rely on faith and gut instinct inorder to decide if a particular economic policy is effective.
I agree with you on that. All economic systems and theories are a product of man, so they’re all flawed. I don’t believe there is a such thing as an “economic law”. You just do the best you can and make it up as you go, hopefully looking backwards for a little guidance.
I Report (-: You Whine )-: mmm, mmmm, mmmmm! Just sayin...
July 20th, 2012
1:23 pm
Which candidate do you expect to do more about the most pressing problems faced by small firms — Barack Obama or Mitt Romney?
Geez, Kyle, you even had to ask this question?
I mean really, president Little Tard runs hither and yon telling small business owners he’s going to ease their concerns about regulation by raising their taxes and making that their biggest concern.
Tiberius - pulling the tail of the left AND right when needed
July 20th, 2012
1:23 pm
“Kyle, what are your thoughts on the LIBOR scam? do you think banks should be self-regulating?
wonder why you are silent on this”
This is known in the business as a deflection.
fedup
July 20th, 2012
1:30 pm
Is there a website that lists actual regulations created thus far during the Obama administration that negatively impact small businesses? Any independent data describing these regulations? I am trying to determine whether this is a real problem or is something that gets repeated so much that people are afraid of what they just “know” is coming versus what is really there.
Tiberius - pulling the tail of the left AND right when needed
July 20th, 2012
1:32 pm
What part of Poor Boy’s 12:49 did you not understand, fedup?
Tiberius - pulling the tail of the left AND right when needed
July 20th, 2012
1:33 pm
Off for a warm soak of my poor, aching back.
Later!
MarkV
July 20th, 2012
1:35 pm
The fallacy of Kyle’s conclusion is quite clear:
“— this graph clearly shows why improved demand hasn’t shifted the economy out of neutral: Increased regulation has stifled the recovery we might have had.”
The graph shows nothing like that. The graph only shows what business answering the cited survey said about their concerns, not what actually has happened.
stranger in a strange land
July 20th, 2012
1:37 pm
TO: I’m a liberal and believe everything I read and nothing the other side comes up with…cause we’re smart and they are not.
you need to cool it with actual data. We liberals FEEL like regulations are not a problem and if you keep it with facts – well then….you’re just a…you know…like a hater
They BOTH suck
July 20th, 2012
1:39 pm
Kyle
In certain industries and companies there is a lack of aggregate demand.
As for the article. I am not arguing with the chart you put up, however you seem to short on specifics in terms of the issues within the chart. How about a deep dive within those categories.
As for demand. Not many companies turning away business because of Obamacare being declared constitutional. Outside of contractual or proprietary issues, if company A can not meet a customers demand, company B will do it.
They BOTH suck
July 20th, 2012
1:41 pm
MarkV @ 1:35
Bingo. Kyle is making an opinionated conclusion based on the overall aggregate numbers in that survey. He could be correct, however it is an opinion
AU Liberal in ATL
July 20th, 2012
1:43 pm
Hating the President because he is so much more intelligent, more compassionate, more capable, better educated and is just a better person than you are is not pretty. That also explains your hatred for Bill Clinton and your love of Dubya. You’re a pathetic and disgusting excuse for a human being.
They BOTH suck
July 20th, 2012
1:44 pm
“I am a liberal”
Haven’t seen you next door. Hope you are coming back.