HOW THE NANNY STATE KILLS JOBS RECOVERY

Lets say I have idea for food product that, I think, can net a profit of $1,000,000 for my small company IF I can manage the risks. I don't know for certain--only the consumer will prove if I am right or wrong. What are the risks?

• Will the ingredients be available at a price that allows a profit?
• Will my advertising be successful?
• Can I get the financing?
• Can I find the right employees? At an affordable cost?

In business, all that risk is on the front end and is personal--If I fail, I pay. I don't have lobbyists and a slew of attorneys at my disposal--just my ideas and willingness to assume reasonable risk.

1. Financing: Regulatory reform is on the agenda so getting a bank loan will be hard and whatever terms we agree upon can be changed by the government. Most likely, I will have to provide a personal guarantee.
2. Marketing Research: I know a young, recent Marketing graduate who is willing, anxious to gain experience. She is raw talent. I don't have the money for market research--she wants this project to get her feet wet, apply her class learning and build her resume. DOL has a brochure touting the benefits of internships. But I just read in the NYT that DOL is making it more difficult to use unpaid interns. The article linked me to the DOL guidelines which includes Rule 4: "The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer's operations may actually be impeded." (emphasis added) Dare I chance that, if successful I derive benefit from her research and risk fines, back pay, benefits, etc. Of course I would derive an advantage--why else would I bring her on for the project? She's not worth minimum wage so she will just have to continue her membership in the 20%+ youth unemployment, forgo the opportunity to get some in depth experience and build her resume. I would have thought that a 22 year old could make that decision for herself, but the Nanny State thinks better.
   
3. Hiring employees: Don't dare--with Obamacare in place, I will be faced with health insurance mandates, potential unionization if card check passes, and higher payroll taxes. If I am going to produce this product, will have to outsource it overseas.
4. Pricing the product: Will VAT taxes, if passed, affect this product? If so, the price shoots up. When inflation takes off, and it will given the huge federal deficit, will consumers be able to afford it?
5. Packaging: How can I possibly design packaging? FDA is proposing to change all the rules on packaging--Nanny State believes the public is too stupid to turn the package over so they will likely require labeling on the front of the package. How do I plan for that now? Plus I face the increased costs of redesigning all the packaging for all the products I sell now.

How do I plan for anything? I cannot just monitor what Congress will do because FDA, EPA, DOL, FCC are monstrous churn out regs machines and there is no appeal if they come out with regs that could destroy my business.

Bottom line--I don't personally need the money that I could potentially make, if I assume all these risks. And taxes are going up for the "rich" all over the place. Say I am successful and generate the $1,000,000 profit. After federal, state and local taxes, I would be lucky to net $500,000. My goal would be to invest the money but the income from that would be subject to the new Medicare taxes on unearned income and would keep me in a higher bracket for personal income taxes. At best, my heirs, after estate tax, would end up with $250,000. So I take all those risks for--what?

Why would I assume the risks given the rewards? I wouldn't. Too bad. Would have been a great product, could have produced many jobs and spin off businesses, could have benefited my community. Too bad. I have no incentive to take the risks--just disincentives and possible loss. Too bad. No jobs. No recovery.

This is what happens when this much uncertainty is introduced in to the small business or start up environment. It dies. Plain and Simple. Recovery dies.