How Much Does Government Regulation Cost You?

Abigail and Dolley readers for every product you buy, what do you think it costs you to pay for government regulation in that item?  I think the price would astound you.  Some costs may not be directly rolled into the price of the product but definitely reduce the amount of net income that goes back to a companies bottom line.  Let me give you a couple of examples that I have noted recently.

I am working on a plan to move one of my branches to a new location.  I found out today that I have to install an entirely new bathroom in the facility to comply with new county code related to the Americans with Disabilities Act.  Now, there are a handicap stalls in the existing facilities, but they don't conform to the new regulations.  This new bathroom will eliminate the janitor's closet and will add an additional $15,000 onto the construction costs for the build out.  I lost about 2 hours of my day today reworking the plan and we will get absolutely no value out of this expense.  I have been in my industry for 20 years now and have never once worked with anyone in a wheelchair, nor do I believe I have ever even had a visitor in one.  What is wrong with the existing facilities?  They are 3" too small.  Will we roll this into the cost of our product, no, it just increases my overhead.

The next one relates to transportation costs and I would like to specifically point out the air freight market.  International or Domestic, Import or Export - it does not matter, if you are flying something to meet a critical deadline you are paying out the nose for security fees.  Right after 9/11 the airlines started charging a War Risk Surcharge - $0.15/kg on every shipment and this past August due to 100% screening requirements we added another $0.15/kg for screening fees.  Right off the top we have 0.30/kg for every shipment, then there are all the documents and paperwork needed to comply with security regulations and you add another $50/shipment.  This might seem nominal at first glance but it adds up.  Theoretically if you figure 2 million kgs of airfreight moving everyday the cost of security regulatory compliance is roughly about $220 Million dollars a year.  That is added directly on to the price you pay for everything you buy. (My estimates)

There is nothing of intrinsic value that is added in either of the above instances, they are merely costs associated with complying with an ever increasing Nanny State that seeks to regulate business out of existence.

Chinese Manufacturing and Why the USA Should NOT be Behind

I recently had a very interesting opportunity to learn about Chinese Manufacturing from a gentlemen I met from Qingdao (pronounced Ching-Dow).  We were picking on him for all of the Chinese Holidays and he explained why this was so.  80% of all workers in China are what we would refer to as long term commuters.  Meaning that they leave their families at home in the countryside and come to the city for work.  Only during the two week or one month holidays do they get to go home to see their families.

Guangzhou Train Station

Now from an American mindset, we would get in the car and drive home.  Not so in China, they have to try and get a bus or train ticket.  Eager workers can wait up to a week to try and buy a ticket, many will not be successful.  Traffic jams in and out of the cities can last a week.  Many workers once they finally make it home, will not return to the factories.  Instead they take the money they have saved and open grocery stores and the like in their own villages.  Thus, the highly skilled workers needed for complex manufacturing are always turning over.

Beijing Traffic Jam

This is where the American Manufacturing, workforce, and culture SHOULD be able to kick the Chinese collective butts.  We have an educated, stable, and motivated workforce who can go home every night to their families.  We also are the primary consumers of many of the products the world makes so shipping costs remain constant and are not subject to the massive fluctuations we have seen in International Freight.

So why are we loosing this battle?  I contend we have two problems - Government and Unions.  Both of which are represented as the "answer" to the current economic catastrophe we are in by the party in power.  The Democrats represent bigger and more powerful entities that are in my opinion the most significant impediment to recovery and world competitiveness.

Government suppresses American Manufacturing in a number of ways but primarily with punitive taxes and regulations.  Once again, the Democrats class warfare on the "evil rich" and their penchant for "safety" regulations render it virtually impossible to put out a competitive product.

Unions strangle the ability for businesses to adapt, change, and maximize a skilled work force by ridiculous rules and wages that far outpace the market.  Pensions, lavish healthcare plans, and inflexibility also make it much more difficult to compete.

As I listened to the Chinese gentleman describing the real situation in the Chinese firms, I couldn't help but think that the Democrats actually admire China and if they had their way, we would be just like them.  The American spirit will never be subjected like this though, they have forgotten who they are in their quest for control and power, but the American people have not forgotten.

We will begin to throw off the bonds of regulation, government, and communist unions.  We will begin to rise again and we will not loose our place in the world, no matter what the Democrats would like.  We The People will never submit.

EPA - An Agency Out of Control

In my professional capacity, I receive daily updates on Congressional actions that may effect my industry.  For the last year, the increase in hearings and investigations has increased dramatically.  Here is a new one for you, involving the EPA.  Ah yes, the beloved EPA who I believe has strayed so far from its original purpose that it should be disbanded and reformed with a strict structure and over view of power.  The legislative functions the agency has been usurping is unconstitutional and if we do not look out we will be looking at an all powerful Executive Branch, if in truth, we are not already.  That is though, another post.

Those of you watching the news and keeping up with things, and I assume, if you have somehow found this little blog, Abigail and Dolley, that you already are aware of the EPA's recent pronouncement that your exhale is a pollutant.  If you are unaware of this brilliant pronouncement then I suggest you Google the subject and read up on it.  It is amazing in its utter ridiculousness but do not be fooled it is intended to force Congress to pass laws that move it back into line.  Again, another post.

So to finally get to what I originally started out to write this morning... There is a law on the books that was passed in 1976 called the Toxic Substance Control Act (TSCA).  Earlier this month, the House Subcommittee on Energy and Commerce (the lovely folks that gave us Cap and Trade) held a hearing on evaluating this Legislation.  EPA head, Lisa Jackson, has publicly stated her agency will be carrying out the environmental and regulatory agenda of the Obama Administration.  My Glenn Beck fans and readers are particularly disturbed by that prospect. 

The EPA is now claiming that the 1976 TSCA law must be changed because it limits the power of the EPA to regulate all chemicals in America.  You see, in 1976 the Congress allowed a Grandfather provision in the TSCA that said chemicals already in commercial use at the time did not have to comply with the new laws, these laws require extensive testing and government approval for all commercial chemical.

Thus, the activist EPA has gone whining to the "Cap and Trade" House Committee to state that:  They can't regulate these chemicals and no one has tested them for safety with Children, who know we are just doing this for the children, right?  Also, those pesky laws are keeping them from regulating the industry and that needs to STOP.  The EPA urges Congress to act now, I am sure it is an "Emergency" after all these dangerous chemicals have been in use since before 1976 and Americans are obviously in danger....

Give me a break.  The consequences of if the EPA is successful will create huge burdens on the industry and guess what?  It will raise the cost of everything you buy.  So let's see, they want to regulate (shocking) products that have been on the market and in use for 33 years, it will cause undue regulation on a self regulating industry that better not put out poison or harmful products because they are sued six ways to Sunday, it will do nothing but grow the government, won't do you a bit of good, and will actually cost you more money.

Yep, that about sums up Liberal Government.  How's that Change working out for ya?