regulation Archives — Laissez FaireLaissez Faire

One nice thing about living in Orange County, California is that food trucks are seemingly everywhere that is convenient. A waffle food truck pulls into my apartment complex, offering a late Saturday breakfast. Different trucks rotate in on Thursday evening, offering a quick dinner. Food trucks visit the corporate park where I work, offering lunch. Food trucks also have a strong presence at local parks and events. And the variety is wide: I have seen food trucks serving lobster, sushi, pizza, Thai, vegetarian, Mexican, monster burgers, etc. If you can think of the food, it is probably served out of a truck in Orange County.

Orange County, California, is surely no free market when it comes to the mobile food industry. But contrast the industry’s presence in O.C. to the dearth of food trucks in New York City, as described in this recent New York Times column:

As I was walking through Prospect Park recently, I wanted to find a healthful snack for my son and something for me. The only options, though, were the same sort of carts that my dad took me to in the ’70s: Good Humor ice cream, overpriced cans of soda and overboiled hot dogs sitting in cloudy water. This seemed ridiculous. In the past few decades, food in New York City has gone through a complete transformation, but the street-vendor market, which should be more nimble, barely budges. Shouldn’t there be four Wafels & Dinges trucks for every hot-dog cart?

Why are food trucks not easy to find in New York City? He blames regulations:

There are numerous (and sometimes conflicting) regulations required by the departments of Health, Sanitation, Transportation and Consumer Affairs. These rules are enforced, with varying consistency, by the New York Police Department. As a result, according to City Councilman Dan Garodnick, it’s nearly impossible (even if you fill out the right paperwork) to operate a truck without breaking some law. Trucks can’t sell food if they’re parked in a metered space . . . or if they’re within 200 feet of a school . . . or within 500 feet of a public market . . . and so on.

Things can get so bad that one food-truck employee spent eight hours in jail for vending falafels without the proper license!

The author concludes by comparing New York City regulations with the Third World:

In Ecuador, for example, it takes about 56 days and 13 separate procedures to get all the legal paperwork done to start a new business. In the United States, it’s an average of six days and six procedures. But if you want to open a mobile-food business in New York, it’s essentially like starting a business in Ecuador — and that’s if you can somehow arrange a permit.

I do not agree with everything the author says, but this whole article is worth reading because it illustrates how regulations can mire and discourage business activity.

(This is cross-posted from Voices for Reason.)

Photo Credit: Telstar Logistics via Compfight cc

I never cease to be shocked over how people who I meet on a regular basis are held back by regulations. For instance, I was having a nice conversation with a cab driver who was transporting me to my home after a business trip. He recently came to the country from Africa and he was ecstatic to be living here, especially in beautiful Southern California.

Naturally, I was curious to learn about the different kinds of regulations that taxi drivers must comply with. In California, my driver explained, cab drivers who have a local-government-issued permit to pick up passengers in one city are not necessarily permitted to make pickups in a neighboring city.

“How does this impact you?” I asked him.

He indicated that he often picks up passengers from John Wayne Airport in the city of Santa Ana, where he is licensed, and takes them to Disneyland. But since Disneyland is in the neighboring city of Anaheim, he is legally forbidden to pick up passengers there and take them back to the airport. Instead, he is forced to drive back to the airport without a passenger, wasting his time and costing him a potential fare.

Of course, he could try to jump through the regulatory hoops to get a permit from the city of Anaheim as well. But this requires money, time, and a lot of paperwork. And even if he tries, the city of Anaheim might not give him a permit anyway, because they may want to cap the number of cab drivers who are allowed to operate in their city, just as some other cities do.

This is yet another example of the often unseen aspect of the regulatory state: an imbroglio of rules that make it more cumbersome for decent, hardworking people to earn a living.

(This is cross-posted from Voices for Reason.)

Image: wpclipart

If you would like to ask me a question, you can submit it here.

In a recent brief media appearance, Andy Puzder—the CEO of the parent company of the Hardee’s and Carl’s Jr. fast food chains—discussed how difficult it is to do business in California’s regulatory environment. Here is my summary of a few of the things that he brought up:

• Due to regulations, it takes on average 240 days to build a restaurant in California compared to the 60 days it takes in Texas, or even the 125-175 days it takes in Russia.
• Because the state prevents managers from performing too many “non-managerial tasks,” he has to pay his managers in California restaurants as hourly employees so that they can also legally pitch in on things such as food preparation or working the register when an additional hand is needed.
• And because the state of California has severe restrictions on the working arrangements of hourly employees—mandatory break times, mandatory overtime pay, etc.—he has had to regrettably fire managers who were working too hard. It did not make business sense to pay any one employee that much overtime.

You can watch the whole interview here or by clicking on the embedded video below.

Puzder also indicated that his company is focusing on building new restaurants in states with fewer regulations, such as Texas and Tennessee, rather than in California. I wonder how many other businesses are choosing to not locate in California due to its regulatory environment?

Here are some recent accounts of the government’s involvement in business activity that I found worth reading:

• Gasoline Regulations. The EPA is ratcheting up regulations on oil refiners, requiring that the average amount of sulfur in gasoline be at most 10 parts per million, instead of 30 parts per million. Refiners indicate that this could raise the price of gasoline by nearly 10 cents per gallon.
• Dell Buyout. In an effort to turn around their company, Dell is entertaining a buyout offer from a private equity firm. But, like all such deals, the government is heavily involved. This deal required a 274-page report to be filed with the Securities and Exchange Commission as well as a review process that could take five to ten weeks.
• Airline Merger. The court administering American Airlines’ bankruptcy approved a merger with US Airways, a major milestone on the path to forming the world’s largest commercial airline. Antitrust authorities, however, are still reviewing the planned merger.
• Big-Box Retailer Discrimination. Washington, D.C., legislators are trying to pass a bill that will force large big-box retailers—Walmart, Costco, Home Depot—to pay at least $11.75 per hour, plus benefits, and this wage would be pegged to increase with a local consumer price index.
• Nanny State Defenders. The New York Times recently ran an op-ed in which philosopher Sarah Conly defended New York City’s attempted ban on large sugary drinks as well as other such paternalistic interventions in principle. Although I completely reject her view, I find it worth reading because it is a well-articulated argument that any defender of free market capitalism needs to answer to convince others of the virtues of a free society. In particular, note how she quickly goes into one of the fundamental issues in the battle for capitalism: the view of man. Is every man a sovereign individual worthy and able to live his life for his own sake? Or are we a society of imbeciles incapable of taking care of ourselves without the oversight of a few elites?