Barriers to Business – How cities can pave a path to entrepreneurship

https://www.inc.com/victor-w-hwang/institute-of-justice-regulations.html

by sbuttgereit • 4 years ago

231 254 4 years ago

sokoloff2• 4 years ago

I’m almost shocked that the $5.5K in fees figure isn’t much higher. I’d have guessed that it’d be closer to the San Francisco >$20K figure.

_uy6i• 4 years ago

It’s $22k per the link

heretogetout5• 4 years ago

Yeah but they forgot to break it down. For other cities they lump in one-time-per-building costs into what is required to open a business, making the report misleading and dishonest at best. It'd be like including the cost of installing a fire door 100 years ago in the budget for every business that ever rents the building.

In Minneapolis, for example, many brick-and-mortar business owners must pay a fee associated with the impact their business will have on the sewer system; in the case of a restaurant, this fee reaches $8,275—bringing the total cost of legal permission to start a restaurant in Minneapolis to $13,973.

I've yet to see a libertarian or libertarian-inspired article that did not heavily rely on dishonesty and this IJ report is no different.

KoftaBob2• 4 years ago

One of the things I'm starting to notice from cases like this, is that it seems like the current state of things is:

- State & local government is a preemptively over-regulated system, putting up tons of obstacles before you can get something accomplished. Examples: flurry of permits, NIMBYism, etc

- Federal government is a retroactively under-regulated system, where the actual regulation occurs after some/much of the damage has already been done. Examples: regulation of antitrust/anti-competitive practices that come sometimes years after the acts began.

In the 1st case, accomplishing beneficial things is too slow. In the 2nd case, preventing bad things is too slow.

Hermel• 4 years ago

I would say both are over-regulated, but maybe not as overregulated as Europe.

An interesting thing to note is that European countries tend to make rules to outlaw risky behavior in the first place, but have limited fines in case the risk materializes, whereas the United States tends to allow more risk taking, but imposes exorbitant fines if something goes wrong.

Both systems have their advantages.

usrn• 4 years ago

This is by design. Most of the laws are supposed to be state/local in the US and the federal government is only supposed to help coordinate/defend them.

pfdietz• 4 years ago

There are those the law protects but does not bind, and those the law binds but does not protect.

mensetmanusman3• 4 years ago

I love studies like this. Giving people simple ways to understand where we currently are and where we need to be makes problem-solving much simpler.

The goal should be to reduce friction by an order of magnitude. Shoot for a goal of 10 steps and $500 in fees.

djbebs• 4 years ago

Shoot for 1 step and 0$ in fees.

dsr_3• 4 years ago

That depends on what you think of as a step, and what you think of as fees.

Is it one step if the single form for opening a restaurant is 200 pages?

Is it zero fees if the fine for violating a health inspection is $10,000?

The forms demonstrate that the new restaurateur has safe plans in place for traffic, seating, fire risk, equipment, food storage (dry, refrigerated and frozen), sanitation, and know the requirements for employment and training. If there's alcohol, there's licensing and training requirements. Are the kitchen floors both non-slip and impervious to water, with a proper drain? Are there arrangements for waste disposal, especially for used oils?

I'm not even in the food business; I'm sure an expert can tell you much more.

mensetmanusman3• 4 years ago

I don’t think fees should be $0, that would allow bot farms to start businesses.

I’m wondering how different the world would have been if we had enforced a $0.01 cost for email…

egberts12• 4 years ago

It should be zero step as in Ronald Swanson’s “how ‘bout them apples?”

HWR_144• 4 years ago

The goal should be to reduce friction by an order of magnitude. Shoot for a goal of 10 steps and $500 in fees.

So without knowing what the steps are and the fees cover, you're just opposed? If it was 10 steps and $500 would you be pitching 1 step and $50?

Fact is, if you cannot figure out how to fill out forms indicating you know enough to avoid it, I don't trust you not to poison people, clog the sewers with fat or barricade the emergency exits.

cbetti• 4 years ago

The high numbers here are eye-opening, but the article doesn't shed any light on the process.

I'm left with the feeling that opening a restaurant is hard, but there is nothing to chew on in terms of improving the situation as a citizen or interested party.

KoftaBob2• 4 years ago

The full study that the article links to has a more in-depth look on the processes in several cities: https://ij.org/wp-content/uploads/2021/12/Barriers-to-Busine...

redtexture• 4 years ago

Many of the counted steps are required state wide, and not in the ambit of the municipality. State licensing processes for various Barbers, and so on.

This is the state legislature's doing.

Others are standard nationwide, and not going away:

Setting up a corporation, or LLC for example. Or filing for a "doing business as" d/b/a name.

I am unsympathetic to counting these as a step.

I cannot get worked up about building permits. Here is why:

This is a national regime, and most states operate under the "International Building Code", and similar Electrical and other codes, and the requirements there, for commercial structures are often based on factual risks and deaths from lack of proper construction.

That means every building needs to be up to code when renovated in various categories: electrical, plumbing, heating/ventilation, smoke and carbon monoxide detectors, fire code compliance, structurally, and more recently for energy code (typically insulation and heating/cooling related). These are essential for safety and health, and for economic well being in the long run. Yes these take capital. That can be 5 to 10 permits and inspections there, and those requirements are not going away, nationwide.

There can be other municipal department participation for curb cuts, street access, sidewalk access and so on. Deal with it.

Zoning is a municipal level, and that requires City Council and Planning Board participation, and not in control of the administrators operating the regulations. This is political level of regulation, and requires political effort to modify, typicall not in the ambit of administrators.

Other "steps" in which all fees and taxes to a municipality need to be up to date are simply good practice.

- No action if you are overdue on your real estate taxes, or have outstanding orders for compliance with health or building codes.

That is mere enforcement of existing municipal regulations. Get up to date on all of your obligations.

leblancfg3• 4 years ago

Agree with this push a hundred percent. I’d love to see numbers for Canada too, my suspicion is that it’s even worse. Starting a business here feels a lot like trying to cross the border in the game Papers Please.

My buddy opened a small guitar pedal shop from his attic, and was promptly told by the city he was circumventing zoning regulations, and was eventually forced to find a spot in the “industrial” sector, even though he was a tiny operation.

If politicians want to actually support small businesses and entrepreneurship, IMO auditing current bylaws and processes is the way to go.

Edit: words

newsclues• 4 years ago

Canada is regulated to death. My city is complaining about being forced to approve building permits in 2 months. Local government officials are using permits and regulations to limit the housing supply in a city with a housing affordability and homelessness crisis. The bureaucrats in charge all own homes…

plutonorm• 4 years ago

They don't, as you are probably aware. They create barriers to entry for existing businesses that have the cash to issue bribes (or 'lobby' as some may euphemistically call it).

This is one of the major reasons for the stagnation of all empires.

leblancfg3• 4 years ago

For sure, I guess I’m jaded enough that I felt it was so obvious as to not point out out.

I still have some faith in possible change at the municipal level, at least in smaller ones.

tbran• 4 years ago

Several years ago a hostel owner in Costa Rica was telling me about trying to get things done through the small city government for his business.

After failing to get permits/licenses/whatever it was, someone told him he needed to give the city administrator some cash on the side for things to go through. Boom! Instant success!

At the time of our talking, he'd accepted that paying bribes to the government (not what the locals called it) was just a regular part of doing business.

It was astonishing that it was required, openly acknowledged/accepted by the locals, and pervasive through other government branches.

m00dy• 4 years ago

well, I don't want to get downvoted but I have to say...Blockchain fixes this.

honkdaddy• 4 years ago

It seems like the problem here is government over-regulation, so unless businesses operating on the chain were exempt from normal laws, why would blockchain help?

dapids2• 4 years ago

How?

tomrod• 4 years ago

A public facing append only database fixes this how?

dagw• 4 years ago

If you don't want to get downvoted you are going to have to provide a lot more detail. Incredible claims require incredible evidence and all that.

moritonal• 4 years ago

How? By blockchain do you mean the tech, or are you more referring to it's motif of anarchism?

BucketsMcG• 4 years ago

Sorry, what? How does blockchain get your kitchen through its safety inspection, to choose just one example?

orangepurple• 4 years ago

The men with guns in their hands that come to visit you don't care about your blockchain.

mackman• 4 years ago

"But officer, you can't close me down... the blockchain says I took care of the rat infestation!"

bell-cot• 4 years ago

People may be failing to infer your '/s'.

dapids2• 4 years ago

There is no sarcasm, this person has a track record of not understanding crypto, for example thinks "blockchain replaces BGP". The boy is lost.

iandanforth2• 4 years ago

While I'm sure many will argue about government control vs entrepreneurial freedom, what fascinates me most is the inefficiency. Reading that it takes '77 steps' or '63 steps' or whatever doesn't bother me. My programs have thousands of steps, but the wall-clock step time makes them disappear. No it's the inefficient parts, in-person visits, lack of consolidation, processing delays. All the things that computers are supposed to have solved by now.

I'd reframe this movement not as 'business vs government' but 'everyone vs inefficiency.'

throwaway0a5e8• 4 years ago

If you can't afford (in terms of time as well as money) to put up with it you can screw right off. The city doesn't need or want your low buck development.

Making the process inefficient raises the floor of the minimum viable business. And, more importantly, it raises the floor for who can start one so that you don't get people closing up shop and being bankrupt when something bad happens.

The institutions designing these processes are chock f-ing full of people of questionable intentions. You hear "affordable prices" they hear "trashy clientele". You hear "thin margins" and they hear "can't afford to be taxed more than they currently are". You hear "small family owned business" and they hear "people who have no other assets we can threaten to lien in the case of a dispute". And just to be clear, these people aren't evil (well their actions are, but they're done with good intentions). It's just that the regulatory agencies they work for are set up in such a way that the 2nd and 3rd order "nice to push for but not technically within the scope of what we do here" opinions of all the people involved seep through. At its root this is a diversity problem. There aren't enough Ron Swansons and people who've been f-ed by government bureaucracies working for government bureaucracies so you get bureaucracies doing things that are completely and totally tone deaf.

Edit: And before anyone puts any more words in my mouth, they have no intention of making the process onerous and exclusionary. They have just settled into that equilibrium over the centuries because that is the local maximum their crude "did our last round of changes do what we wanted or not" hill climbing algorithm has found.

iandanforth2• 4 years ago

I agree it's entirely possible that some bureaucracy is intended as a trial by fire. That said I think that is a tiny minority of the time. Never ascribe to malice what can be explained by incompetence.

The people implementing these regulations don't have the time, resources, or expertise to create holistically efficient systems. Instead they can have meetings, write rules, have more meetings, vote on the rules, and then add another step to a process that assumes you go to an office and fill out a form because that's how it was done the first time someone had to come up with the permitting process.

If I approach a rule maker and say "you're trying to over regulate!" then I'm challenging their raison d'etre without demonstrating understanding of their limited toolset. If, on the other hand, I say, "let me reduce your costs, save you time, and help you collect money faster" then (I believe) I'm going to have a better time. It's for that reason that I feel the "everyone vs inefficiency" argument is more likely to succeed.

brtkdotse3• 4 years ago

”can't afford to be taxes (sic) more than they currently are”

This is such a weird take. You get taxed on profits. If you don’t turn a profit you pay zero tax.

Oh, and payroll is not profit.

Spooky233• 4 years ago

Most of those steps exist because of some asshole who did asshole shit.

You need to have an inspection by the water board to size the grease trap because some asshole dumped his cooking waste down the drain and created a fat berg that clogged the sewer. You need fire inspections because assholes block emergency egress, disable smoke alarms, etc. We have health permitting and inspection because people will do things like not fix freezers or leave a tray of raw chicken in 90 degree heat on a tray perched in the grease trap.

Entrepeneurs are great, but many will cut corners to make it work. I’d rather not get poisoned to advance their dream.

skywal_l• 4 years ago

+1. I agree with your point and I think you are absolutely right but your answer seems to fall into the trap the parent was warning about.

Having controls does not mean that they must be inefficient. In fact, bureaucracy and inefficiencies are the enemies of the end goal because they tend to devalue the work of government agencies (or whoever enforce those controls). And then you end up with a libertarian outlet like Institute for Justice telling you that you need half a century to open a donut store.

rglullis3• 4 years ago

Nah, the assholes are the exception, not the rule. This level of bureaucracy is never for the good of the people.

You could have a process that approves things optimistically and have inspections coming later. You could have some form of certification program that let's you say "It's not my first rodeo. I know what I am doing, please let me do it and I take full responsibility for any shit that might happen if I deviate from the best practices."

dionidium2• 4 years ago

There's no such thing as absolute safety. There are only tradeoffs. You don't get safety for free. You have to pay very dearly for it in wasted time, unnavigable bureaucracies, and ultimately lost productivity. Those costs impose a real burden on real people's lives. In some cases that tradeoff is worth it, but you should always be thinking of it as a tradeoff.

A restaurant is one thing, but anybody who has ever hired somebody in the trades to do work on their house knows that the default is not pulling permits at all. If you hire an electrician to add a switch to the light in your closet he's not even going to bother. In many contexts the permitting process is so slow and stupid and inefficient that almost everybody ignores it.

You can't keep upping the ante forever and expect people to go along with it. In the end you might just make things worse.

zelos• 4 years ago

Exactly. The rules may be complicated, but I bet if you threw them all out they'd mostly gradually reappear one by one over the years in response to problems that occur.

magicroot752• 4 years ago

People can do harmful actions unknowingly. There's not much use labeling any inproper action as "asshole." Most of the time people are just making honest mistakes where they didn't adequately consider all the outcomes. You've either got to stomach honest mistakes, or implement rules that prevent them from ever happening. People aren't magically born with the ability to "not do anything an asshole might do"

lucretian• 4 years ago

correct. and to continue the reasoning, we experience this as bureaucratic inefficiency because the inspectors / regulators / etc are chronically underfunded relative to the growing number of users requiring their service. and that's for two related reasons: the bureaucracy is a lagging response as you and others note, and our government has gotten woefully incapable of forward thinking (because of multi-decade sabotage).

tzs3• 4 years ago

We have health permitting and inspection because people will do things like not fix freezers or leave a tray of raw chicken in 90 degree heat on a tray perched in the grease trap.

We are about to have a natural experiment take place related to this. In several states they have amended their health codes to take away the power of inspectors to actually do anything when they find such code violations other than tell the restaurant that they should fix it.

Their county/city health departments can only act now when there is verified report that someone was actually seriously sickened due to the restaurant's actions.

dfxm12• 4 years ago

Yeah, there may be some shock at the 92 number, but really what is a step? I can probably come up with a shocking number of steps to make coffee in the morning... I think it's more important to understand if the process is well defined/laid out and if the overall time from the first to last step is reasonable. Plus, depending on the situation, I'd rather the work be in my hands because I know I would be efficient, at least.

blitzar3• 4 years ago

28 steps to make my cup of coffee in the morning in you were wondering. (plus a few more to clean up afterwards)

simplicio• 4 years ago

Yea, the article would've been more interesting (and probably more convincing?) if it had detailed what some of the steps actually are. I'm generally sympathetic to the idea that inefficient regulation is an issue, but just quoting an opaque number of "steps" seems, if anything, to make the case less convincing by making it feel like they're obfuscating.

jt2190• 4 years ago

If this resonates with you, Victor W. Hwang is also the founder of Right to Start https://www.righttostart.org/mission

Right to Start fights to expand entrepreneurial opportunity for all. We drive civic change through: grassroots organizing and mobilizing, policy advocacy and engagement, and lifting the voices of entrepreneurs through media and storytelling. Our campaign is based in two affiliated nonprofits: Right to Start is a 501(c)3 and Right to Start Fund is a 501(c)4.

bestcoder697• 4 years ago

The idea that entrepreneurs are marginalized in America might just be the funniest motivation for a non-profit I’ve ever seen.

I was trying to think of a job that’s held up on a higher pedestal to make a follow-on joke (“yeah next we need a non-profit to glorify ___”) but even cops, soldiers, and movie stars have less of a halo on them than entrepreneurs.

pdeffebach• 4 years ago

I think small businesses owners often treat their workers badly and are overall a reactionary force in American politics.

But sympathy makes a bit of sense when you think about it economically. The businesses that do make it in have more market share and are selected to be those that are politically connected. The regulations serve to keep other businesses out, and we should try to help people that aren't as connected start businesses as well.

dsr_3• 4 years ago

Remember that the fees get approved by people who ran on "small efficient government must pay for itself" platforms.

Turing_Machine2• 4 years ago

In Boston and San Francisco?

I don't think so, dude.

rosmax_1337• 4 years ago

Death by bureaucracy. This is a sign of an extermely sick society.

throwaway0a5e8• 4 years ago

The market can remain irrational longer than you can remain solvent.

Opening an above the table business in Boston has been onerous since 1630. The micormangerial jerks you need to get permission from happen to have moved their office from the church to the cube farm over the centuries.

floor_2• 4 years ago

OOF. Starting a software business in Indiana only cost me $90 with 0 visits and I recall maybe 2 forms to fill out.

dsr_3• 4 years ago

How many people could you make sick by serving them spoiled software?

And perhaps Indiana should have more regulation for software businesses that do have safety implications.

floor_2• 4 years ago

You've never seem my code. hah

theandrewbailey3• 4 years ago

How many people could you make sick by serving them spoiled software?

In the classic case, at least 3.

https://en.wikipedia.org/wiki/Therac-25

Turing_Machine2• 4 years ago

People have, in fact, been killed by bad software. Many more have been injured or financially ruined by it.

Octoth0rpe• 4 years ago

It's likely similar for a software business in Boston as well. It's really the restaurant part that is so brutal.

mrfusion• 4 years ago

Whatever happened to “Hey, I have some apples, would you like to buy them?” “Yes, thank you!” That’s as complicated as it should be to open a business in this country.

- Ron Swanson, Parks and Recreation

EnKopVand• 4 years ago

Well… The farmer used sewage water to grow the apples. Then the processing factory hollowed out the apples to make juice. The sales company filled the hole with lead. The restaurant bought the cheap lead apples and then painted them red because red apples get eaten faster.

Then someone died and the outraged public demanded regulation.

mensetmanusman3• 4 years ago

That is against the law, you shouldn’t have to prove you aren’t selling poison apples to start a business. Let investigators arrest/fine those breaking the law.

pjc50• 4 years ago

Probably someone showed up with a hundred thousand tonnes of apples coated with toxic pesticide, several people died, and now you need to prove you're not a poison apple vendor.

vidanay• 4 years ago

Snow White Apples, LTD

lbriner2• 4 years ago

People expect to be protected from the unscrupulous which means councils, governments, police, IRS etc. all need to know who is doing what, then there is the ability to do background checks, tax status checks and in regulated areas perhaps hygiene checks, site safety checks, certain permits.

Otherwise the simple model only works when you know and trust the vendor enough to take the risk that what they sell you is not quite what you wanted.

mindvirus3• 4 years ago

I bet someone could make a solid SaaS business around streamlining this. Hard part would be recurring revenue, but I would bet there's a compliance play for long term revenue.

jcalabro• 4 years ago

I'm not sure there's coverage for all the specific work of opening restaurants, but Stripe Atlas [0] is one offering that exists for this purpose. There's also LegalZoom [1].

[0] https://stripe.com/atlas [1] https://www.legalzoom.com/

stewx• 4 years ago

Wouldn't the world be a much better place if we solved the problem rather than finding an angle to monetize it?

mindvirus3• 4 years ago

Maybe, but it's not always possible or straightforward. It's probably a much lower bar to streamline it like this. Fixing the system is often an uphill battle. Maybe existing restaurants will fight against it, cities need the revenue from it, it's a complex mix of federal, state and city laws, etc.

hnthrowaway0315• 4 years ago

I'd be surprised if there is no company running such a business, probably a more traditional one, not an SaaS one. At least in China I know there are companies that run business taking care of registration (and other chores) of new companies. It may take months if you don't use their service, but maybe merely a couple of weeks if you do.

cute_boi• 4 years ago

As always Bureaucracy sucks. As long as bureaucrats earn these money in name of forms etc. will anyone dare to challenge the system? In my country, the system is so atrocious. For small things like Bank statement they require people to go to lawyers for notary etc..

And, due to such bureaucracy corruption also increased because there is a risk that if we don't feed malfeasant officer they might become hindrance.

lbriner2• 4 years ago

Bureaucracy is terrible but the only other mainstream option is based on trust and people have a habit of abusing it.

What alternatives? Someone visits the restaurant and says, "yeah that all looks OK"? Then they take a bribe and the system breaks again.

At least a paper trail provides some history and ability to audit certain things, blacklist owners who posioned their customers, make sure they are paying their fees to pay for the inspections etc.

patchtopic• 4 years ago

I bet there was a fraction of this wasteful paperwork for that place in Thailand where I got laid up with food poisoning for weeks.

aaa_aaa• 4 years ago

Food poisoning usually does not have much relation with opening a business. Most government regulations are just for illusion of safety, and gate keeping.

sofixa2• 4 years ago

Citation needed.

There's this saying, "safety regulations are written in blood". The vast majority of regulations are written reactively, after something went wrong. (US regulations forcing minimum lot, yard, house sizes are notable exceptions).

Especially for something as a restaurant, where 1) people eat, so hygiene and etc. is important; 2) people will work; 3) people will visit, so you needs lots of insurance, health, fire etc. checks and OKs.

roenxi2• 4 years ago

These points of friction are so frustratingly stupid. Successful businesses are rare and delicate things. Every small fee is going to be some genius deciding to stay at their desk job and just take a salary rather than creating a couple of million dollars of value for their community.

And the reasons for all this regulation are fundamentally weak. Regulators tend towards taking no risks. Small businesses are the part of society that are most useful when they experiment and ... take big risks. If the risk is removed, in 20 years there will be a lot less reward than would otherwise have been the case.

But to be realistic about the costs - these regulations were probably put in place because of things like like food poisoning or people getting crushed to death in warehouses. There would be real downsides to removing them. But the crux of the issue is (as can be seen in Asia) it is possible to get economic miracles and build up entire new industries propelling people into a future they did not see coming through steady investment in new industries. People are way underestimating the damage that locking in the status-quo does during this era of miracles. Triggering big economic improvements is worth a lot more than a futile exercise in causing no harm. It is impossible to do no harm, and so these regulations will fail to really achieve their goals while setting communities up for less success in the medium term.

Capitalists routinely wipe the floor with people who don't take enough risk. Risk is necessary to get the best outcomes. Where will the risk taking happen if people try to regulate it out of existence?

praestigiare• 4 years ago

This is a strawman argument. The point of regulation is not to prevent all harm, it is to prevent the worst harms. I see no evidence that allowing the possibility of the worst outcomes is necessary to achieve the best outcomes.

For every foodborne illness prevented or permanent disability from an on the job accident avoided, the community saves a couple million dollars.

If you want less friction, then fund the regulators. We slash city budgets and then wonder why health departments rely on fees and inspectors take weeks.

MagnumOpus• 4 years ago

Every small fee is going to be some genius deciding to stay at their desk job and just take a salary rather than creating a couple of million dollars of value for their community.

I feel you are being dogmatic here rather than evidence based. The markets for restaurants in a given neighbourhood is rather static - and roughly zero-sum in terms of earnings, but _not_ in terms of quality. If you encourage some "fragile genius" who can't follow instructions for fire safety, food hygiene, payroll accounting or plumbing to open a restaurant, you will a vibrant mix of more unsafe restaurants, unhygienic food, unpaid employees and clogged sewers, all of which are a burden on the rest of society.

roenxi2• 4 years ago

That isn't really what these regulations would do though; if that is the goal then an inspection program would achieve them more effectively and with better outcomes.

All pre-start paperwork does is filter out people who are diligent at paperwork, because they have to do a lot more to get to the starting line.

crmd• 4 years ago

Capitalists routinely wipe the floor with people who don't take enough risk. Risk is necessary to get the best outcomes. Where will the risk taking happen if people try to regulate it out of existence?

This is a straw man argument.

Good entrepreneurship is taking a risk on a new cuisine that is underserved in your city, which no one is regulating.

Bad entrepreneurship is taking a risk on inadequate food safety and fire suppression equipment, which municipalities are indeed trying to regulate out of existence.

renewiltord2• 4 years ago

In SF, the first half is also regulated since your business can be stalled on the grounds that there are already too many there. For instance, having two ice cream stores on the same block.

joosters• 4 years ago

Obviously 92 steps is a lot, but if you want to improve the situation, it's no use just saying "this is terrible, make it simpler!", you need to consider:

- Which steps are unnecessary? Unless you have the view that the bureaucracy is just designed to be hellish, you need to figure out what each step is trying to achieve, and what would be lost if it were removed.

- Can steps/agencies be merged? If there are nine government agencies involved, you could simplify the procedure by moving the responsibilities to fewer agencies. But there are limits... at the extreme, if you made just one government agency responsible for restaurants, you'd make opening a restaurant easier, but - congratulations! - you've effectively just created a new government agency for restaurants. Now you've added to the bureaucracy!

realityking2• 4 years ago

Your second point reminded me of an interesting different between US government services and German government services. Not for businesses but for individuals. Here we have, since the 1980, “peoples offices”, either run buy the municipality or the county (never both) to address most common in-person government interactions for folks. This allows not only consolidating multiple interactions in one visit but also increases the geographic density of the offices as they have a lot more visitors.

The services they offer range from registering your apartment (doubles as voter registration), getting IDs, passport, and driver licenses, changing the registration of your car, getting proof of (the absence) of your criminal record. For many of these services, they have delegated or assigned authority from whatever government agency is responsible while for some they merely operate as a service center.

I wish more of this could be done online, but it’s certainly nice I don’t have to go to 15 different places to do all of that.

HWR_144• 4 years ago

it’s certainly nice I don’t have to go to 15 different places to do all of that.

How many times have you had to do more than one of those things in the same visit?

InefficientRed12• 4 years ago

A "people's office" is the top recommendation in the report:

1. Create a true one-stop shop for starting a business, with step-by-step guides and well-organized information that cover city and state requirements.

2. Simplify the process to obtain building permits by combining steps and paperwork, creating more guides for complying with agency rules, and lowering fees.

These seem like excellent recommendations.

I'm not so sure about the other recommendations:

3. Eliminate “clean hands” requirements to ensure those working to lift themselves out of poverty are not immediately disqualified.

Maybe. Not being able to start a business because of a few parking tickets on your personal vehicle is obviously harmful. But there's also potential for abuse. Some sort of dollar limit does seem reasonable.

Remove unfair barriers that burden specific types of work, such as home-based businesses and food trucks, with unnecessary restrictions.

1. What barriers? "Must prove you have a refuse management plan" may sound like needless red tape, but see my top-level post.

2. home-based businesses sound like no big deal when you're on SFH >= half acre lots, but these rules exist in dense cities for a good reason. The type of business and type of residential dwelling are important considerations. Running a business out of a studio apartment using the hallway as a waiting room can be enormously disruptive to hundreds of people.

Work with the state to eliminate state-level bar- riers to work, such as criminal history checks, that often target vulnerable residents.

Again, largely in favor but the details matter.

_fat_santa2• 4 years ago

There's a political catch-22 here. Everyone that works in those departments and agencies that will be axed will fight tooth and nail to make sure it's not their department.

It's a bit like the housing crisis. We need more homes, ok well who votes on those homes? The people that already owns homes and are interested in the value of those homes going up.

bluedino• 4 years ago

I'm amazed at how many underground food businesses there are in my area. People advertise all kind of meals on Facebook, they only take cash app, and you can have it delivered or go pick it up (at someone's house, of course). They only make food on certain days, some do meals while other do desserts...

throwaway0a5e8• 4 years ago

These businesses are underground because the regulatory burden of being over the table makes them either impossible to start because of upfront costs vs future profit or impossible to to keep viable because of recurring costs.

Nobody "wants" to run an under the table business and have their income be subject to the whims of enforcement but the other option is just so bad it's the lesser evil.

blitzar3• 4 years ago

Nobody "wants" to run an under the table business

Cash in hand no tax. Plenty of people want to earn that, and plenty of people want to pay no sales tax.

ahmadss• 4 years ago

I run a microbakery on the side (https://www.instagram.com/stoneleigh.microbakery/) and my local government knows nothing about this operation. That said, I only sell to friends and neighbors bc if somehow my bread gets spoiled (highly unlikely, unless its focaccia and they leave it out for 2 days), I can resolve it directly with them and not have to deal w the health department.

Symmetry2• 4 years ago

Reminds me of the book The Mystery of Capital by Hernando de Soto which was a look at how in many countries capitalism only exists for the rich while the poor, without social connections and bribe money, don't have access to things like enforceable contracts, official property that could be used as collateral for loans, etc. One eye opening bit was when he had grad students in various countries try to register a new business without paying any bribes and he measured how many steps, days, forms, etc it took.

Symmetry2• 4 years ago

I'd also say that while this is a major problem and ought to be fixed, streamlining the process from the perspective of the people applying is probably going to require both political will and spending more on city administration.

micromacrofoot3• 4 years ago

Boston has a lot of restaurants, so what would it be like without this process?

mhb3• 4 years ago

More variety, lower cost.

micromacrofoot3• 4 years ago

How so? Rent is the primary driver of cost (much higher than the fees) and there's already a fairly wide variety by US standards.

I guess to frame it a different way, is there a major city in the US that doesn't have the bureaucracy, and also has a better restaurant scene?

tbihl• 4 years ago

For anyone getting walking voluntarily into a bureaucratic labyrinth like this, I highly encourage documenting the whole sequence so you don't get lost in the middle of it. With something distasteful like this value-destroying sequence of waits and applications and meetings, it's reasonable to try to hold it at arm's length and minimize the time you voluntarily commit, but these things will eat you alive if you let them go that way.

bigmattystyles2• 4 years ago

Maybe I'm jaded but 5k (or even the 22k in the article for SF) doesn't seem that bad to me. In 2016, I did a kitchen remodel in my CA townhome and the permit costs, which included a city inspector coming over for 20 minutes cost 3.5k. For context, I paid the licensed contractor 10k for labor. If taxes are low, expect fees I guess.

sofixa2• 4 years ago

Yep. I especially found the article's complaint that a starting business might not have that much money saved weird... If a business cannot afford 5k to register, how will it stay afloat?

theandrewbailey3• 4 years ago

How did paying the city $3,500 help you?

bigmattystyles2• 4 years ago

Safe and permitted work - and if I ever decide to sell the house or have to file an insurance claim, I can show the work was approved and permitted.

127• 4 years ago

92 jobs for each step, 22 jobs for each form, 17 jobs for each office visit, $5,554 into the government coffers. Each step can be sold by some politician as some kind of a win for their campaign. Each of these people will fight hard to hold onto their position. Is this productive work? Maybe a very small minority of it, when you take into account how much it holds entrepreneurship back.

matthewmacleod• 4 years ago

I expect this kind of thing will be red meat to some people, and we can all agree that pointless bureaucracy is bad – particularly where stifling competition is the goal.

IMO the effort of any campaign versus bureaucracy is best spent on reducing the friction of governance, particularly for small entrepreneurs: digitalising processes, publishing clear guides, harmonising rules, establishing guaranteed response times, adding exemptions for small businesses etc.

Too often there's a reflexive "bonfire of the red tape" view – in contrast, I'd say it's actually pretty good that restaurant businesses have to e.g. demonstrate that they meet hygiene standards, produce a fire safety plan etc. and we probably don't want to throw the baby out with the bathwater.

For all its faults, look to the UK for a relatively balanced approach to regulation of this sort.

mrtksn7• 4 years ago

Okay, so what are those 92 steps, 22 form in 17 office visits? The article lack any substance and it is pure activist piece, unfortunately.

There's this story about the extremely heavy and complicated French labor laws. The story goes, businesspeople complain that the law is more than a hundred pages long booklet and as a response the French legislators print the booklet in smaller font, thus successfully taking the laws under 100 pages.

It's supposed to show the ridiculousness of the bureaucracy but IMHO it's pretty fair to solve the problem by using smaller font if the complaint is about the number of pages.

Maybe we can have more intelligent discussion if we actually know the context and the content. I suspect that some of those steps, fees and forms are reasonable and some are outdated and only exist because the law was made pre-internet, pre-smartphone era.

Goronmon• 4 years ago

The first link in the article is to a PDF that covers the issue with much more specific information.

https://ij.org/wp-content/uploads/2021/12/Barriers-to-Busine...

mrtksn7• 4 years ago

I skimmed the linked document and I didn't see the actual steps, did I miss those? Can you give me a page?

There are again tables about number of steps etc. I find that ridiculous.

It would be funny if the regulators respond by combining the steps though. Instead of 1. book sanitary checks 2. pay sanitary check fees, maybe it can be solved in one quick step of 1. booking sanitary checks and pay check fees

blitzar3• 4 years ago

I had to wade through 5 pages of fluff to get to the executive summary.

Then I noticed there are 138 more pages. Finally they actually just list the barriers by state - and each state is 1-2 pages (basically repeated over and over for each of the states) - much more useful.

Included among the heinous barries to freedom to live the american dream are things like "Hand washing regulations" and "Paying Tax".

Dan_Sylveste2• 4 years ago

if the complaint is about the number of pages.

The complaint is obviously not about the number of pages. Printing the booklet in a smaller font is trolling.

'Why did they complain about the number of pages then' argumentation is also trolling.

Semantic argumentation is great for making yourself look clever on the internet but achieves little else.

mrtksn7• 4 years ago

Don't you think that "opening restaurants takes 92 steps" is just as bad as argument? How do we know if those 92 are too many or too few? It takes 120 steps to setup ReactJS development environment, why would anyone be able to start a restaurant with only 92 steps?

That's really not semantic argumentation at all when the core argument is literally about the number of steps.

Yes, I see that the actual argument is about the complexity of the process but the person who argues that doesn't provide any information for us to judge if those steps are necessary or on. The used stats and numbers don't mean anything. What's the right number of steps for opening a restaurant?

zionic• 4 years ago

but IMHO it's pretty fair to solve the problem by using smaller font if the complaint is about the number of pages

How could that possibly be fair, when it clearly violates the intent of the request? If anything that move just shows the maliciousness of the regulators.

egberts12• 4 years ago

Hey, it’s how to keep the government alive, why knock it?

Perhaps it is because when more than 10%-ish of economy is sapped for goverance overhead, it generally starts to suffer … badly.

quickthrower2• 4 years ago

A startup needs to disrupt this!

leblancfg3• 4 years ago

There used to be one called Intuit. I don’t particularly like that they’re essentially lobbying to keep tax laws and processes complicated.

The root cause is at the political level — at all three levels.

gadders• 4 years ago

I remember reading a biography of a Navy Seal (possibly Rob O'Neil) and he tells about when he and his team were gearing up for a mission and choosing their kit and he described something called the "good idea fairy". Some senior person would come along and suggesting add a particular piece of kit as it was a "good idea", then another senior manager would suggest something else and on and on it would go until they would have so much kit to carry they wouldn't be able to carry out the mission. I think the layering on of each for or step is a bureaucratic version of the Good Idea Fairy.

jriot• 4 years ago

There is an excellent book a Peruvian economist Hernando de Soto, The Mystery of Capital, that discusses these issues. He has a chapter on the number of steps it takes to open a business in Hati and Singapore (if memory serves me correctly). Hati requires thousands of steps and if done correctly 17 years to open a business legally. Singapore take a few steps and less that a week to open a business legally. This has broder implications to property rights and if countries prosper.

bestcoder697• 4 years ago

1) “In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, 'I don't see the use of this; let us clear it away.' To which the more intelligent type of reformer will do well to answer: 'If you don't see the use of it, I certainly won't let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it.'”

2) Maybe govts should waive the fees in favor of taking equity as payment. e: And a broader point: there are many more options for removing barriers than removing the regulations themselves. So, this focus on the regulations themselves is fishy. We could fund them with taxes, put businesses on payment plans, and most importantly, consolidate this administrative work (e.g. this is unrealistic, but imagine the efficiencies you could find, regulating all businesses in the US at the federal level. You might be able to get it all done with 1 form!)

3) Currently, being born into this mortal coil has burdensome[0] startup costs of >= $HospitalBill. I’d be down with achieving _that_ Right to Start.

[0] Souls sitting in Earth’s pre-game lobby remain there when their investors (parents) don’t have the capital to front them :-(

graycat2• 4 years ago

The OP starts to make clear why my home cooking is so much cheaper than restaurant food: The ingredients in my version of pizza cost less than $1 per pizza. For pork BBQ, that's about 25 cents per ounce, final, cooked, lean, ready to eat, with a meaty sandwich having 3 ounces.

So, I save on the money that otherwise has to go to paper shuffling, city bureaucrats, likely also lawyers, etc., all before hiring any workers to get the food ready for customers.

I like to think of current progress in computing and the Internet technology as keys to greater economic productivity, but tough to see easy applications of this technology to the context of the OP, other restaurants, many small businesses, etc.

tzs3• 4 years ago

So, I save on the money that otherwise has to go to paper shuffling, city bureaucrats, likely also lawyers, etc., all before hiring any workers to get the food ready for customers.

Those costs to start up the restaurant add almost nothing to the cost of your pizza. What makes a restaurant pizza cost so much more than your home made pizza is the restaurant's ongoing costs, such as rent, wages and benefits, utilities, insurance, advertising, delivery, and many I've probably left out.

Doing a bit of Googling, I get that Domino's averages around 100 pizzas per restaurant per day. When I've went there there are typically maybe 3 employees visible plus drivers coming and going. Let's call it the equivalent of 5 employees at any given time. They are open 14 hours a day. If they are just paying Federal minimum wage that's a tad over $500/day in wages. That's $5/pizza right there.

More Googling tells me that the rent for an average sized restaurant in the US is about $5000/month, which would be about $160 per day, but a Domino's doesn't need as much space so let's call it $100/day. There's another $1/pizza.

That was assuming they are in one of the 15 states where the minimum wage is just the Federal minimum, and that rent was about average. I'd guess most on HN are in states with a higher minimum wage and higher rents.

graycat2• 4 years ago

Right.

I didn't say, suggest, or believe that the extra cost of restaurant food was due just or mostly to the initial, one-time costs of the startup.

Instead I wrote

all before hiring any workers to get the food ready for customers.

So, those are the on-going costs you illustrated.

Also my main lament and summary remark was quite general covering both times and categories of small businesses:

I like to think of current progress in computing and the Internet technology as keys to greater economic productivity, but tough to see easy applications of this technology to the context of the OP, other restaurants, many small businesses, etc.

Sure, small gains in "economic productivity" are visible, so I would revise that lament to "tough to see the desired big gains ...."

sheeshkebab• 4 years ago

It better be time and money consuming opening a place with public health implications.

captainmuon• 4 years ago

I mean, that sounds bad, but that report is from a libertarian organisation with an agenda, so they have a reason to paint it in a bad light. I wonder how many of these steps are incidental, and how many are really justified.

If I think about what it would take to open a restaurant here in Germany (a country which also has a reputation for bureaucracy to be fair) I think there are a lot of unavoidable steps:

Register a business, register with the chamber of commerce, and the tax office. Maybe also with town hall. Check if the restaurant is in accordance with the development plan. Apply for any exemptions/licenses if needed. You need certifications from the health department. You need to take steps to proove you don't have unreported employees. There are fire safety checks. You need toilets, but fortunately not parking spots (usually). And this is just scratching the surface.

But I think, unfortunately, many of these make sense and are unavoidable. And honestly, you can get help for many steps, and the time and money expended is not too big compared with, I don't know, the current rent for a restaurant in a good location.

quadrifoliate• 4 years ago

I had a long quote here, but the report linked in the article [1] answers a lot of my gripes with the article itself.

The five categories of businesses they are focused on are:

- Restaurants

- Retail bookstores

- Food trucks

- Barbershops

- Home-based tutoring

----------------------------------------

[1] https://ij.org/wp-content/uploads/2021/12/Barriers-to-Busine...

cm2187• 4 years ago

It requires a license to be a barber but not a software developer…

macinjosh• 4 years ago

Neither should require a license...

Broken_Hippo• 4 years ago

In general, the chances of you making someone sick or injured by developing software is very, very low indeed.

An unclean barber can spread lice and other diseases if they are unclean, not to mention that they are using sharp tools near someone's head ... or a razorblade on someone's face.

Do you want to trust that you'll not catch diseases or other things from the barber or would you rather be able to have some sort of license?

If you'd rather take the risk, so be it. I'd rather not.

nonameiguess• 4 years ago

I'm not gonna sit here and say the process and expense is at least some theoretical optimal level everywhere that exactly balances public interest with whatever benefits accrue to society from having more restaurants with lower barrier to entry, but this article is presupposing the point with "excessive." That is hard to quantify. It's not like there is no reason for these things.

I actually helped a friend open a restaurant in Long Beach, CA a few decades back and among the reasons for the expense:

- You're serving food, so there has to be some check that you're procuring food that isn't spoiled and you're properly storing and preparing it

- Anything communally served (i.e. buffet style) needs to have safeguards in place to ensure you're not creating disease vectors

- You're generating a bunch of biological waste and need to dispose of that properly

- The cooking process puts out a bunch of waste grease that needs to be trapped and kept out of the normal water disposal system so you're not clogging everyone else's pipes

- A kitchen is quite obviously a fire hazard and needs to comply with codes preventing fires

- If you're not providing your own parking lot, your customers are going to be parking on the street and someone needs to pay for that additional congestion to prevent externalities

There is no way to automate the inspection process, so humans need to do it, and I'm not gonna say these are super high-skill jobs, but code inspectors still need to be paid. What other way is there to do this except paying upfront before you have revenue?

So again, maybe this exact number of steps is excessive, maybe the in-person visits are excessive, maybe the expense is excessive, but simply enumerating them doesn't demonstrate that. What are the steps? What is on the forms? What is the purpose of these visits? How are these fees being spent?

wolframhempel4• 4 years ago

I think there is a fundamental misalignment of incentives between the government and its citizens. Governments as an abstract entity might have an interest in thriving entrepreneurship and economic growth, but the individual bureaucrats they employ do not. And its those Bureaucrats that design and apply processes.

As a result, most western countries now have an ever growing apparatus of bureaucrats who are not accountable to the citizenship and who's sole reason for being is the facilitation of process. In order to increase their relevance and hence influence and paygrade, it is in their best interest to increase the amount of process and the role that process plays in everyday decision making.

What worries me is that I don't see any remedy to this. Germany, a particularly bad offender when it comes to process and red tape has been attempting "Bürokratieabbau" - bureaucracy reduction since 1997. As a result we now have a commission for bureaucracy reduction which manages several operating bodies for bureaucracy reduction, all with their own processes and guidelines.

I'm honestly worried that this might grow to a point of collapse.

cft• 4 years ago

It's logical for any entity to attempt to capture more resources. Thus a government wants more government. Bigger budget, more salaries, more bureaucracy therefore.

yieldcrv• 4 years ago

This is a great perspective that has allowed me to navigate society effectively

For example, when it comes to taxation the outcome is that certain kinds transactions are incentivized, leading to no tax, while no individual bureaucrat or politician or resident would seem to agree about the ability of not paying any tax, the aggregate tax revenue services collaborate with a tax filer and support that ability

mywittyname3• 4 years ago

Bureaucracy is a natural outcome of maturing processes.

It used to be easy to do things. But then business owners would do things that would make citizens say, "they shouldn't be able to do that." So rules/laws were made to prevent people from doing it.

You can go on a mission to reduce redtape, but the results will probably be temporary. Contrary to the way some people think, these regulations aren't put into place willy-nilly, they are the natural outcome of people cheating the system and causing others harm.

It's not just governments either. Anyone who has worked at a startup and a huge mega corp sees the difference in how easy it is to deploy something. Startups have no guards in place, while megacorps need sign-offs from various departments, etc.

metacritic12• 4 years ago

Right, the rules were put in place to reduce bad behavior. The question is, did the government accurately predict the cost of the rules / red tape itself?

I think the steelman of the GP is that the red tape was not accurately predicted. Most citizens can probably agree "all else equal, we don't want a pub in the middle of a residential district open till 4am with drunkards wandering the streets". But did they also properly opening a local business should be so hard that each business effectively has a local moat, raising prices and reducing restaurant selection?

Also, the opinion that unresponsive bureaucracy needs to exist seems defeatist on the side of government regulation. Why can't we design better permitting processes that both ensure crazy pubs don't open in the middle of a suburb, and yet also make opening most normal businesses a 1-day affair?

mindvirus3• 4 years ago

They're also the result of businesses creating regulatory moats. All this red tape to open a restaurant is great if you have a restaurant and don't want competitors spinning up left and right.

mhuffman• 4 years ago

But then business owners would do things that would make citizens say, "they shouldn't be able to do that." So rules/laws were made to prevent people from doing it.

By "citizens", I assume you mean other business owners trying to keep new entrants out of the sector, or putting themselves in place to approve those that do.

There is an interesting "parable" [1] from the 70's that goes over this and lays it out for what it is, which is basically always a form of regulatory capture.

[1] https://www.nationalaffairs.com/public_interest/detail/the-p...

epc3• 4 years ago

Bureaucrats report to (mostly) elected politicians (in the US). Politicians report to the public. The public complain about food poisoning, not about 92 forms to open a restaurant. The politician tells their bureaucrats to “do something” about all the food poisoning by under regulated restaurants.

The regulatory bureaucracy is a lagging, indirect response to bad behavior by previous individuals and businesses. It’s never going to absolutely prevent bad behavior just as speed limits do not actually prevent speeding, but it is a legal tool or cudgel to inhibit the behavior and punish it in retrospect. And that in turn is both to reduce the cost of government from dealing with responses to bad behavior and ensure the politicians get reelected.

AlgorithmicTime• 4 years ago

The problem is bureaucrats are unfireable. The politician can't actually make them "do something" because they lack the power to incentivize them.

heretogetout5• 4 years ago

And that in turn is both to reduce the cost of government from dealing with responses to bad behavior and ensure the politicians get reelected.

And reduce the number of food poisoning incidents to some degree, of course.

wolframhempel4• 4 years ago

I think that's how it should work - but unfortunately not how it does. Both Trump and Obama complained about what people would refer to as the "deep state". Here's a quote from Putin of all People describing the phenomenon:

I have already talked with one US President, and with another, and with the third - Presidents come and go, but the policy does not change. Do you know why? Because the power of the bureaucracy is very strong. The person gets elected, he comes with some ideas, and then people come to him with briefcases, well dressed and in dark suits, like mine, but not with a red tie, but with black or dark blue, and they begin to explain what he should do - and everything changes at once. This happens from one administration to the next.

hourago• 4 years ago

Why do bureaucrats have an incentive to make their own work harder? How do you explain then how easier is to do taxes in bureaucratic Europe compared with the USA?

I will say that the worst burocracy is created when private companies meddle with the government affairs.

BlargMcLarg• 4 years ago

Because that keeps them employed, plain and simple. Almost no self-preserving human being would optimize themselves out of a job without something better waiting in the wings. Creating more work and harder work does the opposite, it allows them more security.

Even if it doesn't mean they want to make more work (like how most developers wouldn't maliciously add bugs to create more work), it does mean the incentive to make less work without a way to preserve oneself is extremely low.

lazyier• 4 years ago

"Government" is a metaphysical concept.

What people call "The Government", in this case, is the Municipal Corporation of Boston.

This corporation profits from a monopoly control over many aspects of people's lives and special legal privileges within its geographical boundaries.

Like any other human organization it's true "purpose" and "motivation" is the collective desires of the people that run and make up that organization. Which is, mostly, going to be:

Financing the life styles and political ambitions of the people running it. That is how it works once you strip away all the flowery language and idealism.

People get involved in city government because it benefits them. It may be a stepping stone in a career in bigger government. Maybe they are looking for stable income, cheap benefits, and solid pension. Or cushy job they can't get fired from. Or its social status; they enjoy having power over people's lives, they enjoy having their opinions matter and being perceived as a person of importance.

Lots of different motivations. The corporation's motivations are their motivations. Its purpose is their purpose.

As a result we now have a commission for bureaucracy reduction which manages several operating bodies for bureaucracy reduction, all with their own processes and guidelines.

The first order of business for any bureaucracy is to ensure its own survival.

Nobody wants to eliminate their own well being. Everybody wants security in their job. And everybody wants more money and a promotion, for the most part.

With large very stable organizations like government corporations anybody that wants to make more money (ie: get a promotion) will usually have to wait for the guy above them to retire or quit, which can take years. Sometimes education can open doors, but mostly it's going to be people leaving the organization that have been there longer then you have. Things like seniority ensure there is very little opportunity for growth.

The main opportunity for growth for a government bureaucrat is laterally... Meaning new agencies or bureaucracies need to be created that they can move into and have seniority there.

So once a bureaucracy has secured its own survival the second order of business is to grow new bureaucracies.

Which is exactly the pattern we see in all governments.

fleetwoodsnack• 4 years ago

People get involved in city government because it benefits them. It may be a stepping stone in a career in bigger government. Maybe they are looking for stable income, cheap benefits, and solid pension. Or cushy job they can't get fired from. Or its social status; they enjoy having power over people's lives, they enjoy having their opinions matter and being perceived as a person of importance. Lots of different motivations. The corporation's motivations are their motivations. Its purpose is their purpose.

You listed many reasons, and built a long argument on the implications of these reasons. Perhaps this was an oversight but it’s worth mentioning that civic engagement for its own sake is a fairly natural instinct and is arguably more important than any of the other aforementioned factors.

pontifier5• 4 years ago

I ran for mayor of Provo Utah under the slogan of "Disincorporate Provo"... I didn't win.

mrtksn7• 4 years ago

I don't think there's a misalignment at all, the complexities come when the governments try to build water tight systems.

For example, let's say that to do some specific work the law says a degree is required. Normally, a degree is something that a university gives to its successful students so it shouldn't be that big of a bureaucracy to hire someone for that job, right?

firts, they start by simply taking the xerox copy of the diploma. Then someone starts hiring people without a diploma and forges a fake xerox copy and gets caught? To solve this, bureaucrats introduce a requirement for diploma registrations so they can check against fakes.

Congratulation, now you have an office visit step where you go show your original diploma.

Unfortunately, some people start showing fake diplomas. Once the bureaucrats catch on, they introduce a protocol with the universities to start checking the diplomas. Unfortunately, some universities say they can't accommodate that, others say they can do it moving forward but can't to for those who graduated more than 5 years ago. Also, some people studied abroad, others have their institutions merged or seized to exits.

Congratulation, now you have multiple ways to accomplish the same thing. You will need to fill the correct form.

bkirkby2• 4 years ago

What you describe is the exact reason we should question your very premise. "For example, let's say that to do some specific the law says a degree is required."

Why is the government in the business of requiring degrees for financial transactions? Maybe that's valid for a doctor, but it's certainly not valid for a hair dresser.

mylons• 4 years ago

this phenomenon also happens within businesses and in a more bizarre fashion. look at all the layers of management a startup will slap on at some point in it’s life because it’s commonplace at other companies and Google. look at the processes like Jira, stand ups, sprint planning, etc etc that the management class will institute and defend because it creates work and meaning for their position.

throwaway12603• 4 years ago

The problem is not necessarily the individual bureaucrats. They're annoying and add unnecessary complexity/paperwork. It goes a level deeper than that...

The problem is entrepreneurial support organizations (typically organized as a "non-profit") that the government awards economic development grants to, who are then supposed to support the entrepreneurs. These are often incubators, accelerators and/or venture support/investment organizations. Universities sometimes fill this role as well.

These organizations take a MASSIVE cut of the funding to cover their "overhead" before any money goes to the entrepreneurs. The amount of the allotted government funding that goes to entrepreneurs to actually grow their business is tiny after the various "non profit" organizations get their hands on it.

I've seen state funded business plan pitch competitions that cost far in excess of $2M to put on their annual pitch event, with teams of 5+ employees "working" full-time on them. I've seen a party planner get paid $195k to put on a one-time demo day for 300 people. I've seen consultants get hired for $15k to put on a one-day sales workshop for founders. A successful founder paid $170k to give a speech at a demo day. Universities charging 53% overhead rates to run government funded programs. Program directors paid $200k+ to work on an accelerator that runs for 3 months of the year. I could go on and on.

All of this was government funded in the name of "economic development." How many of us on HN could start a brand new business if we got even a fraction of this funding instead of wasting it on pomp and circumstance that masquerades as economic development?

I guess the bureaucrats could/should realize this is a waste and put a stop to it, so perhaps it is back to being their fault. But these "non profit" orgs whose mission is to "support entrepreneurs" have no qualms about pulling up to the trough of government fundings and sucking it dry before it goes to actual entrepreneurs...

(Source: I've seen this spending first-hand since I work at once of these places, which is why I'm posting this under a newly created alt account. Trying to do my tiny part to stop it, but it's systemic and hard to change.)

InefficientRed12• 4 years ago

This is all absolutely true. "Economic development" is a weird world.

There is a logic: elected officials want to be seen as supporting new business growth but of course can't literally invest taxpayer money in seed rounds. It's not reasonable or sane, of course, but that's why it happens...

Anyways, I think that sort of thing is mostly in the past by now? I don't see it happening much around here anymore. Perhaps there's a new grift.

dredmorbius• 4 years ago

Keep in mind that a heavy burden on opening new restaurants also serves all existing restaurants. That is, if you've an extant operation, barriers to entry are in your own interest.

This makes the constituency for strong regulation not only all diners, but all existing restaurants, with the constituency against strong regulation being whomever happens to be currently trying to open a new restaurant in the area.

Balance of power goes to obstruction.

See also Mancur Olsen's classic "The Logic of Collective Action" (both a short paper which captures the essence, and a book which dives into greater detail and more examples).

ClumsyPilot3• 4 years ago

Governments as an abstract entity might have an interest in thriving entrepreneurship and economic growth, but the individual bureaucrats they employ do not. And its those Bureaucrats that design and apply processes.

This is exactly same in corporations - they are also full of bureocrats.

I can spend 5 grand on AWS rltomorriw and noone will raise an eyebrow

but we arent allowed to get a rmmmtablet to test the application qewe are developing actually works as intended

pontifier5• 4 years ago

Maybe it's the real reason Rome fell?

People couldn't get the permits required to do the work to fix the problems that needed fixing, or it was just easier to just go start over in a place that let you raise your goats or whatever in peace without needing to fill out 92 forms for each one.

DeathArrow• 4 years ago

US has built much of it's reputation around being business friendly. How is "92 Steps, 22 Forms, 17 Office Visits, and $5,554 in 12 Fees" being business friendly?

Is US in the process of becoming a socialist bureaucratic country?

heretogetout5• 4 years ago

When I see that figure I think "that's all? That's what these business owners are complaining about, a month of a living wage salary? What crybabies."

lebuffon• 4 years ago

I find this very concerning in an American city.

In The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else by Hernando Desoto; He makes mention of the bureaucracy overhead in countries that fail at capitalism. Sounds like America needs some house cleaning in places.

My sad observation however is that normal people try to fix things by adding on. It takes quite a bit of smarts to remove things from a system and make it work better. The only case I have heard of is New Zealand re-wrote their tax code to 12 (?) pages or something like that 30 years ago. I wonder how big it is now?

pietroppeter• 4 years ago

I first read it as “opening a rust-aurant…” lol

VLM• 4 years ago

At some point in economic decline, the business concepts of attendants pumping-gas-aaS and people shining-shoes-aaS become no longer widely distributed and profitable. Customers don't make long term investments in commodity -aaS businesses and when the cost exceeds the value they very quickly leave, and when enough leave the -aaS business folds.

It seems likely we are nearing that point for many business models. Small scale retail, small scale restaurant. Even large scale retail is nearly dead, see the dead mall situation.

It does seem somewhat ridiculous to have an ultra short term relationship with a servant to have them cook assembly line fashion, generally mediocre, food for you at enormous expense with numerous layers of middlemen in between.

Certainly restaurants were an extremely small fraction of total caloric intake for the majority of history; there just wasn't enough excess wealth floating around for nonsense like that. Soon, as permanent economic decline continues, we will go back to generally not having restaurants. As always, people will adapt or perish, and usually they adapt.

The future is always unevenly distributed and Boston may just be a little further along.

djoldman• 4 years ago

Many of these fees are not for a typical situation. For example, digging into the Minneapolis fees, one finds that $8,275.05 of the $13,972.68 total is for the Sewer Availability Charge described as:

... a one-time fee that communities pay to Metropolitan Council Environmental Services (MCES) when a residence or business connects to the metropolitan disposal system for the first time. [0]

If one started a restaurant in a previously used restaurant space, my sense is that many of these large fees would be essentially zero. Still there is a lot of licensing and inspecting.

[0] https://www2.minneapolismn.gov/business-services/licenses-pe....

fakedang• 4 years ago

This is pretty much the case in every country though. Tbf my dad has made a business of acquiring distressed restaurants and improving their profitability. In most cases, the suckers are first-time restaurant owners who viewed it as a side hustle rather than a full time job.

In most cases, it costs about 4x as much to open a restaurant than to acquire a distressed one. Anecdotally, a restaurant that was built with a cost of about a million bucks (local currency) in a 500 sq ft place (expensive city), was acquired by him for about 50k, and is now back to clocking about 1.5 million in revenue.

mhb3• 4 years ago

Barber Schools and License Requirements in Rhode Island

1. Graduate from a 1500-Hour Rhode Island Barber Training Program

2. Submit a Rhode Island Barber License Application

3. Pass the Rhode Island Written and Practical Licensing Exams

4. Start a Career in Rhode Island’s Barbering Industry

5. Renew your Rhode Island Barbering License Biannually

https://www.barber-license.com/rhode-island/

briandear2• 4 years ago

Try African hair braiding. In many states simply to braid hair requires a 1000 hour cosmetology license. To braid fucking hair. Never once in my life heard of anyone dying or even getting sick because of a bad hair braider.

https://www.bostonherald.com/2021/02/05/time-to-loosen-hair-...

magicroot752• 4 years ago

NIMBYism drives things like this. Sure, we abstractly want fewer regulations for the restaurant 12 blocks away. As long as you can keep strict regulations on the empty retail space below your apartment, the tight parking situation on your block, or the crime rate in your neighborhood.

jshprentz• 4 years ago

Boston's Cocoanut Grove nightclub fire[1] claimed 492 lives in 1942, so I am not surprised that the city imposes many checks on new restaurants.

Neither the headline, the article, nor the linked Institute for Justice report[2] list the specific steps, forms, visits, or fees. It is hard to know which are superfluous, overpriced, or excessively burdonsome. The report defines "steps" on page 17 (PDF page 21):

We calculated this metric by totaling the discrete tasks an entrepreneur must complete to start each of the business types. Tasks we counted as steps include but are not limited to: filing a form or application, submitting supporting documentation, scheduling and attending meetings and inspections, and completing ancillary requirements like training or zoning checks.

Of the five business types in 20 cities studied, the report lists fees only for starting a restaurant in Minneapolis. Totalling $13,972.68, the fees are LLC filing: $155, Trade name registration: $50, Building plan review: $1,399.13, Building permit: $2,242.50, Plumbing permit: $207, Mechanical permit: $250, Electrical permit: $251, Sign permit: $156, Sewer availability charge: $8,275.05, Background report: $8, Restaurant license: $535, Food plan review: $310, Certified Food Protection Manager (CFPM) training: $99, and CFPM certificate: $35.

We can compare the roughly $14,000 in startup fees (or just $5,554 in Boston) with the $375,500 median cost of starting a restaurant (according to a 2018 survey[3] by RestaurantOwner.com). I don't think those fees discourage entrepreneurs from opening restaurants.

I agree with the report's overall conclusion: cities should make it cheaper, make it faster, and make it simpler.

[1] https://en.wikipedia.org/wiki/Cocoanut_Grove_fire

[2] https://ij.org/wp-content/uploads/2021/12/Barriers-to-Busine...

[3] https://www.restaurantowner.com/public/Survey-How-Much-Does-...

LatteLazy• 4 years ago

I feel like a lot of these problems would be sorted by having time limits of (say) 10 years for all laws in an area. If someone actually looked at all those requirements, forms etc as a whole, I bet a lot could be combined or are covering the same ground. But no one ever does.

I also think restaurants can be a bad example:

* Everyone wants to open them and there is no special qualification for doing so

* They can easily make a lot of people sick

* They employ kids, informally qualified staff, low wage workers and immigrants making it easy to for-see all sorts of abuses or issues especially in a demanding physical job with tiny profit margins

* They often want to serve alcohol which is a socially complex, rightfully regulated activity

* They require on-going management, not just "did you buy the right kit and hire the right person" but are you actually cleaning everything everyday correctly etc?

They're a mess of big risks and poor management and no funding. And customers have no idea what they're getting until 24h+ later when they're bent over a toilet...

jrm42• 4 years ago

For a long while, I theorized that most entrepeneur types who were complaining about government inefficiency were a bunch of entitled whiners; most were already starting from a place of privilege and were confusing mere necessary annoyances with true hardship.

Then there came an opportunity, and I started my own web design business. I learned something important.

I was right. It's really not that bad, and as many people have suggested, this red tape was put into place for reasons. I admit it's frequently annoying, but in no way is it a meaningful barrier to someone who has a dream and really wants to work for it.

prawn• 4 years ago

What red tape exists for a web design business? At the most basic level, you can just work and charge. Maybe register a basic business name for $80 or whatever. If more successful, register a company and handle taxes a bit differently. Is it different where you live?

jrm42• 4 years ago

Florida, so there's dealing with our sunbiz stuff. Taxes got weirder this year because there are now increased reporting requirements for subcontractors, etc.

InefficientRed12• 4 years ago

At my last apartment, we got a new neighbor who ran a food truck and dumped the food truck's trash in our apartment's trash bins.

This obviously introduced many issues. The (~6 very large) bins were always full by 3 days after pickup and then overfilled all over the back of the complex for the rest of the week. Rodent and especially ant/fruit fly issues exploded. The smell was atrocious. The bins were directly behind our kitchen door, and we didn't have AC, so our kitchen door had to stay closed. The kitchen door was key to the airflow that would naturally cool the apartment, so the entire apartment was miserable.

Worst of all, the neighbor did not take any of the bins to the curb each week, was unresponsive, and our landlord was predictably unhelpful. For many weeks I patched the issue by hauling this guy's business trash to the curb every single morning (which is a lot more work, and much more unpleasant, than it perhaps sounds like).

Before that experience, I would probably see rules like "food trucks must file a form proving they have a legal place to dump their refuse" and consider it to be absurd red tape.

wffurr• 4 years ago

Well past time to go to the city inspector. Or refuse to haul the trash entirely.

InefficientRed12• 4 years ago

Well past time to go to the city inspector.

"Our neighbors have a lot of trash" is not a complaint that a city inspector is going to take seriously, and in any case our city was very landlord-friendly/human-hostile. In most cities waiting for the leas to be up and then moving out is always easier...

We resolved this by threatening the neighbor to go to the office that permitted his food truck.

If food truck regulations didn't exist, we would have been SOL until the lease was up.

Or refuse to haul the trash entirely.

This was an impractical option.

On an 85 degree day, our apartment would stay below 75 (and below 70 until late afternoon close to the end of the workday) if we kept the large front windows open, the kitchen door open, and some well-placed fans. It would heat up to 85 very quickly if you closed off the airflow. Working in 85 degree heat is highly unpleasant.

To say nothing of the rats and fruit flies/ants, which were impossible to keep out of the apartment even when we kept the doors and windows closed.

gloriana• 4 years ago

Nice story. Laws and regulations are broken all the time, but only used/prosecuted very rarely when the circumstances are egregious and the parties are pissed. E.g. violent criminals in jail have committed 10-30x more violent crimes than the single one they have been convicted for. Similarly most minor infractions go completely unnoticed and unreported because no one cares. The laws are are there to make things prosecutable and punishable. But they are not there. You can operate many businesses completely outside the law without running into any problems as long as you are courteous, unnoticed, and do no harm. You respect the laws in spirit, but not in practice. E.g. you don't do all the paper work, but you also are a good citizen and respect the rules in spirit if not in practice.

InefficientRed12• 4 years ago

Yeah. One of our other neighbors ran a tutoring side business out of her apartment, which was technically illegal but of course didn't bother anyone and went unnoticed.

throwaway0a5e8• 4 years ago

You can operate many businesses completely outside the law without running into any problems as long as you are courteous, unnoticed, and do no harm.

The problem with this is that if you're doing it enough to make a living off of (i.e. not a side gig) it makes you a massive target for enforcers looking to issue fines. And there's always the Karen who'd rather narc on you than politely ask you not to do something that you didn't even know was pissing them off.

pontifier5• 4 years ago

Sounds like your neighbor did have a legal place to dump refuse so adding that rule wouldn't have helped, and then everyone in Boston would have a 93rd step in the process.

I've spent 2 years trying to get permission to have electricians put wire back into conduit that is already there in a building I own.

Saturday thieves broke into my outdoor containers (because I can't get an occupancy permit) and stole over $20,000 worth of stuff. I can't install security lighting and security systems without power to run them!

This stuff is really getting to me and I feel like I'm in an Ayn Rand book.

InefficientRed12• 4 years ago

Sounds like your neighbor did have a legal place to dump refuse

Well, no. After he stopped using our residential bins, he started dumping in city trash cans, was fined, and then ultimately paid for use of a dumpster.

so adding that rule wouldn't have helped

He wasn't aware that either of his illegal dumping methods were illegal, and changed his behavior when he was informed (in the second case by a fine). So a form probably would have, in fact, prevented the situation from happening.

and then everyone in Boston would have a 93rd step in the process.

I probably spent 40 hours on this issue. Much of that time highly unpleasant (cleaning out rodent traps, taking out cheap trash bags that would break and make a mess, spraying down gross trash bins and the back sidewalk, etc)

A one page online form that takes 5 minutes to fill out, for every food truck in the city, consumes perhaps 20 hours of time on the high end. So this one event I experienced already pays a net 20 hour profit to society.

I'm not the only one who has had issues with food truck trash disposal -- it's actually a fairly common issue for cities and one of the primary sources of complaints my city received about food trucks. A quick google search shows that other cities have similar issues and some even ban food trucks because of trash issues.

I'm sorry about your building code issues, that sounds very annoying and unfair, but only Ayn Rand could complain about filling out forms when a business is literally trashing someone's home ;-)

blobbers2• 4 years ago

The thing is, red tape shouldn’t be there to enforce compliance. He could have done that even if he’d paid the fees, which maybe he did?

Seems like a separate issue of your neighbor not being very considerate and dumping (illegally?).

InefficientRed12• 4 years ago

Seems like a separate issue of your neighbor not being very considerate and dumping (illegally?).

Refuse externalities are a systemic issue for food trucks. They were the #1 reason for complaints about food trucks in my city. There are news articles about beach towns banning food trucks and an article about Portland considering a ban in certain areas because of trash issues. This case was egregious but the problem is not uncommon.

The thing is, red tape shouldn’t be there to enforce compliance. He could have done that even if he’d paid the fees, which maybe he did?

He went on to dump in city trash cans (illegally), was fined, then arranged for a dumpster. He claims, and I believe this is true, that he didn't know either residential or city trash was off-limits. (I believe it is true because getting away with illegal dumping when done intentionally is super easy... you only get caught when you do it in broad daylight in front of a cop because you don't know it's not allowed.)

Given that issues with trash from food trucks are predictable and known, simply asking for proof that the food truck owner has access to a dumpster or other waste management option seems pretty reasonable. If the food truck owner has a proper waste management plan then describing it should take a few minutes max ("I am paying XYZ to use the dumpster located behind 123 Main St."). If they don't have a plan then this is a net positive for them because they'd almost certainly otherwise end up with either fines or a revoked license.

Even assuming a 1/200 success rate at reducing illegal dumping, requiring a waste management plan would cost 20 hours (amortized over hundreds of people) and save 40 hours (amortized over 1 person). The actual savings are probably much higher because 1/200 is unrealistically low -- I'm willing to bet most illegal dumping of food truck waste is not intentionally illegal.

Why is it incumbent on the rest of society to subsidize food truck owners at the tune of 2x time?

ClumsyPilot3• 4 years ago

red tape shouldn’t be there to enforce compliance

Thats like.. The only purpose of red tape?

m0llusk• 4 years ago

What may matter most is how these barriers are negotiated.

Do people really need to be protected from barbers with limited training or could that be handled with disclosures? And how are violations discovered and resolved. In my case I started cleaning houses for money and had completed hundreds of cleanings by the time the city found out and let me know that license fees were due for that activity. The city insisted on full back payment of all licensing along with late fees and there was no option for negotiation, just the requirement that someone who was cleaning houses for money should suddenly cough up a couple of thousand dollars. Not only was a large payment required but records needed to be sorted out which ended up generating two long and tense visits to offices downtown.

Of course some regulations are needed on businesses, but these regulations should be put in place for robust reasons, regularly reviewed, and enforced with care and compassion and options for forgiving unpaid fees in return for present and future compliance.

darth_avocado• 4 years ago

it’s nearly as bad in San Francisco

Goes on to report San Francisco is 4x the cost in Boston. Really?

blobbers2• 4 years ago

Sapiens volume 2 graphic novel is a nice tangent to this topic if one is looking for further thoughts on these sorts of topics.

People have said it’s a bit preachy, but I prefer to consider it thought provoking.

NegativeLatency• 4 years ago

Having single payer healthcare would've helped me a lot when I was looking to start my own business. Without it it makes the personal savings runway too short.

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