Why excessive regulation is a bad thing.

We’ve all experienced them one way or another.

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Regulations

You know those natty little issues that prevent you for pursuing happiness YOUR WAY.

Obviously, some regulations are good. I personally think it’s a great thing that in general folks aren’t allowed to store their excrement in a big pile in the back yard.

In this extreme example, it really is about public health and safety.

But what happens when the regulations become so all encompassing and pervasive that they retard innovation and growth?

Then you have California…

…where the light at the end of the tunnel is actually an oncoming train of smothering laws… all implemented “For the public good“.

Here are some short examples of regulation gone wild.

Gas Prices

California gas prices recently made national news because they were the highest in the nation. Heck they even beat Hawaii!

How is that possible? Hawaii is an island in the middle of the Pacific and has to import everything by ship. WTF?

Well the simplest answer is that California has regulations that make it different from all the other states in the country. California is not unique in this, there are a number of states that have “Boutique” gas blends they’re also in as risky a position as California.

California gas is “special” due to AQMD regulations, EPA, and no doubt tons of extraneous laws that help to drive the legal system. For the sake of  argument California Gas is refined only in California therefore making it sole sourced.

That’s the problem with insisting on being different and then tying your wagon to a single source of anything. I’d bet that since the auto industry has pretty much standardized on emission control devices… these “boutique blends” are relics of a time long past and no longer necessary.

VOCs (Volatile Organic Compounds)

Have you tried to find a small mom & pop independent auto body shop lately? Guess what? There are a lot fewer of them in California than there once were. Why? because regulations came into effect that forced these folk to either work with paints that are a lot more delicate and far more difficult to apply or get out of the body shop business.

I wonder, how many small independent shops have closed since the VOC regulations took effect? How many people ended up unemployed? How many people took their businesses and tax revenue out of the state?

This affects everyone here in California, because excessive regulation has limited competition. A door scrape that used to cost $125 to fix, now costs $550. Why?

Because in addition to there being less competition you now have to sand and repaint the ENTIRE Door, not just the area surrounding the scrape.

It seems you can’t mix water based paints with oil based paints (No Shit Sherlock) and since many auto manufacturers are still using oil based paints to initially paint their vehicles YOU,  the consumer get stuck with higher repair bills. That translates to higher insurance costs too.

Independent Offset Printers, have exactly the same problem. There was an article in the Orange County register that discussed a business owner who moved to Nevada. He was able to assist his employees in the move, and was also able to provide them with fully paid healthcare due to savings he realized once he was out of California. By the way… The business owner was still able to make a profit because is was after all an evil capitalistic pig.

The funniest part of it was that his company had switched over to inks that were water based and he only very rarely used anything with any kind of VOC.

Like most of us would, when the quality of water based inks was equal to the older VOC based inks he switched.

It was better for him, his employees, his equipment, and made for a more pleasant working environment. 

However,  because he was an offset printer in California he still had to pay all the fees as if he was using the older inks.

Even if he never used anything containing a VOC again and turned away some jobs, His designation as an Offset Printer demanded that he paid for the privilege of running his business.

Essentially, this small business owner was regulated right out of the state.

Building Codes

I’ve touched on building codes several times in this blog. I agree fundamentally that a certain level of building regulation is a good thing. After all you do want your house falling apart in a few years?

OH Wait… My house IS falling apart after just a few years… and it passed all the inspections. 

Honestly, I’d have rather had the building code less concerned with how many damn lights were in the ceiling and MORE concerned with the materials in the house and the way those materials were being used. That’s another story entirely, so I’m not going into it here.

Just as an aside… If you’re looking at buying a house in California, buy something that’s older. The quality is going to be better and you’ll get to duck a lot of the stupid regulations unless of course you decide to remodel. Word to the wise… DON’T REMODEL.

My original house built in 1992 was far superior to my rebuilt house built in 2009. I’m reminded of that each and every Winter as I freeze my ass off.

Automobiles

This is one of those things that I simply can’t wrap my head around.

California has different regulations for cars. There are bolt on improvements today, that can make your car run more efficiently. I’m not talking about some lame ass “As seen on TV” hunk of junk. I’m talking about manufacturer approved modifications.

Take my car for example… I could change the air intakes, add a larger oil cooler, change the exhaust (Keeping the catalytic converter mind you) and increase my horsepower by 10HP. That translates to the engine running more efficiently and increases my MPG by a minimum of 2 MPG, estimates are it would be closer to 5MPG. That’s not even changing the computer programs that control the engine.

All of those modifications are illegal in California

Why? Because the California regulators haven’t been paid to test and approve these modifications and therefore these modifications are by definition bad.

I’d push my base EPA milage to 30MPG, Save money, the environment, and use less fuel. How the hell is that BAD?

I could go get these improvements in neighboring states. But then I’d risk the possibility that when I needed to get smog certificates and other California regulatory inspections I’d have to put everything back to “Factory” (read California inefficiency) specifications.

It’s probably easier to just move to a state that doesn’t have the same restrictive regulations.

Apparently the SmartCar gets something close to 100MPG in Europe.

Here in the United States, it gets a paltry 38MPG Why is that???

Regulations! In this case it’s probably something to do with protectionism of the American auto industry. But that kind of regulation flies directly in the face of good ‘ol capitalism.

Isn’t it supposed to be that the guy who builds a better mouse trap gets more business? And by building the better mouse trap, the guys competition begins to innovate and in their turn build an even better mousetrap?

In the age of over regulation that doesn’t happen. If your’e in a protectionist market why compete or innovate?

Then you have Proposition 39

The California legislature has realized that businesses are in fact leaving, and putting their manufacturing in other states. The California Lawmakers in a tacit acknowledgement of this fact have decided to add yet more regulation to the companies who have already moved the majority of their businesses out of the state.

I can’t seem to locate the actual text of proposition 39. Here is the closest link I could find.

This proposition is about imposing taxes on companies for the privilege of having any of their corporation based in California.

WTF???

I can pretty much guarantee that companies affected by this proposition if it’s approved, will move the rest of their corporate holdings out of the state and with them go untold numbers of jobs.

This is how a regulatory mentality destroys an economy. The people making the regulations just don’t get cause and effect.

As I’ve watched California over the past 30 years, there has been a definite trend towards a more controlling state government.

I find now that I can’t really blame businesses for leaving places that are excessively regulated, highly taxed, and whose infrastructure is crumbling.

Proposition 39 is a prime example of what’s wrong with our state and what may be wrong on a broader national basis.

Instead of reviewing the underlying reasoning behind why corporations chose to shutter their operations here  and then addressing those factors. Our politicians are saying they’re going to “Close the tax loopholes” (Crapspeak) and impose taxes on corporations that still maintain a presence in California.

I think I see myself moving out of California in the very near future.

Hey, you have to go where the jobs are…

One Reply to “Why excessive regulation is a bad thing.”

  1. I am reading the text included within the 143 page “California General Election Tuesday November 6, 2012 Official Voter Information Guide”. I am also reading the text available at the link you provided. I’ll admit it, these are not easy things to read. But what did catch my attention is the creation of a fund, a five hundred fifty million dollar fund, transferred from the General Fund.” Nowhere does it say how the money take from the General Fund is replaced. Aren’t people running around and screaming, “There’s NOT ENOUGH money in the General Fund!”? I am sorry, but any measure this election that wants to tax us, in any fashion, sales or income, or to manipulate the money we already pay or paid into gets a NO vote from me. The State of California does not give one shit for it’s residents except to see us as a source of money. The more taxes voted into law by these lazy Democrats only means less that I will spend and the greater likelihood that I will move my business and self out of California.

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