Many people are rightly outraged by President Obama's recent remark that "If you've got a business, you didn't build that. Somebody else made that happen." Success in business does not come from government, they point out, but from hard work. Even then it isn't guaranteed.
Government is necessary to protect our rights, but success in any endeavor is ultimately up to each of us as individuals. Indeed, our out-of-control entitlement spending and the many failed corporate welfare programs -- Solyndra is but one example -- show that even programs that are allegedly designed to help people build businesses create perverse incentives and waste staggering amounts of money.
In fact, far from being responsible for our success, modern government often actively inhibits it.
Bob Wilson, heads up Central Radio Company in Norfolk, Va., where his business has thrived for over 78 years. The company now employs 100 people who make radio systems for the U.S. Navy, among other clients. Yet the Norfolk Redevelopment and Housing Authority have been trying to take Central Radio's property through the power of eminent domain, to turn it over to Old Dominion University. Bob became so angry with the city that he plastered a 375-square-foot banner on the side of his building protesting the effort to take his business. The city responded with a citation for violating its sign code. So now Bob and his colleagues at Central Radio are involved in two lawsuits against the government: one to protect his property, the other to protect his freedom of speech.
Central Radio's experience is no exception. Local governments use eminent domain to take small businesses all the time, often to turn the properties over to favored businesses. In 2005, National City, Calif. attempted to take a local nonprofit boxing gym to give it to a developer for a condo development. Is that the sort of "help" to which Obama was referring?
Governments also strangle businesses with red tape and regulations. In a recent study, my organization, the Institute for Justice, documented the impact of state licensing laws on 102 low- and moderate-income occupations, such as barber, massage therapist and preschool teacher. On average, these licenses force aspiring workers to spend nine months in education or training, pass an exam and pay more than $200 in fees. One third of the licenses take more than a year to earn.
Often, licensing laws are used to protect incumbent businesses from competition. Nashville, Tenn., passed a law not long ago requiring limo and sedan companies to charge no less than $45 per ride. Cabs charge less than that, and the city has decided it needs to manage the market for car services. In 2009, the Portland City Council passed a similar law. It requires limos and sedans to charge a $50 minimum for airport rides and at least 35 percent more than taxicabs for any other trip. The D.C. City Council is considering a similar measure.
These examples only scratch the surface of government restrictions on business. Many states also license pest control applicators, manicurists, door repair contractors, auctioneers, school coaches, animal breeders, taxidermists, travel guides and mobile home installers, to name just a few. The IRS recently imposed a licensing requirement on tax preparers. Laws like these impose costs and make it harder for individuals to start businesses. Unfortunately, they are growing. In the 1950s, only one in 20 U.S. workers needed the government's permission to pursue their chosen occupation. Today, that figure stands at almost one in three.
Anyone who has ever started a business knows that success comes not from government aid, but from hard work, initiative, and a positive attitude. For them, government is not only not the solution, it is often the problem. If the president is truly interested in helping businesses, he should follow a plan that even the government can't screw up: Get out of the way.
Steve Simpson is a senior attorney at the Institute for Justice.