LeVell: Regulations Life-saving, Overregulation Kills Communities

Government regulations keep us safe and protect us from fraudsters and charlatans.

But they can also create a barrier to upward economic mobility by making it harder and more costly to start and grow a business.

We’ve heard a lot lately about bureaucrats threatening to ban gas stoves or coal-fired pizza ovens, but those headline-grabbing proposals are really just the tip of the iceberg.

Small business owners are forced to devote huge amounts of time and money to comply with a mountain of federal regulations, and the list of rules just keeps growing.

The U.S. Small Business Administration (SBA) estimates that firms with fewer than 20 employees incur annual regulatory costs of about $7,000 per employee — which is 60 percent higher than the cost to firms with more than 500 employees. In other words, the regulatory deck is stacked against entrepreneurs.

The fact is, though, that Black and Brown communities need entrepreneurs to generate economic development and build generational wealth.

And while the government can and does provide start-up capital and incentives, the best thing government can do to support minority businesses is make sure the bureaucracy stays out of their way.

Entrepreneurship is almost magical in its ability to generate reliable incomes and financial stability for underdeveloped communities.

But overzealous regulation can kill new businesses while they’re still getting started, before they’re big enough to absorb the cost of compliance.

Excessive regulation also discourages would-be entrepreneurs from starting a new business in the first place, denying struggling Black and Brown communities the opportunity to lift themselves up and overcome the cumulative effects of centuries of adversity.

According to a new study by Casey Mulligan, a professor of economics at the University of Chicago, the Biden administration added over $1.2 trillion in regulatory costs in just two years.

Mulligan calculates that this amounts to just under $10,000 per American household in current and future regulatory costs.

But regulatory costs aren’t spread evenly across every household.

That’s not how it works.

Rather, they fall primarily on the backs of small business owners — the people who are often touted as the "engine" of our economy, and whose efforts are vital to the economic success of Black and Brown communities.

This writer has been a business owner for almost 30 years, and naturally I’ve got a lot of friends who are also small business owners.

This onslaught of new regulations is painful for successful, established businesses.

But it’s devastating to entrepreneurs who are just getting started.

They’re getting crushed by these added costs.

For many, a few thousand extra dollars in expenses can be the difference between growing the business and being forced to shut the doors.

Remember: These people aren’t being driven out of business because they’ve made bad decisions or done something unethical.

Their only "crime" was trying to provide something that people wanted to buy, hiring people to provide those goods or services, and contributing to the vitality of their communities.

The fact is, over-regulation can strangle the lifeblood out of entire communities.

When businesses close, their employees lose their livelihoods and they vacate their storefront. Unemployment creates desperation and vacant buildings are a magnet for crime. The result is a community that’s both poorer and less safe.

Fortunately, the opposite is also true.

When the federal government cuts back on unnecessary or excessive regulations (which can be done even while adding necessary new regulations to keep people safe and healthy), it makes life a little easier for small business owners, who can then grow and expand their businesses.

Best of all, it doesn’t cost taxpayers a dime.

Regulations are necessary to keep our economy functioning and protect the American people from unscrupulous actors.

But too many regulations end up creating more problems than they solve — especially for Black and Brown communities that rely on entrepreneurs for sustainable economic growth.

(A related article may be found here.)

Bruce LeVell has been a business owner in the Atlanta area for over 28 years. He is a member of the Board of Directors for Concerned Communities for America, and is a frequent contributor on Fox News, One America News, Newsmax, MSNBC, and CNN.