Business Begging for Life

Even in this seemingly permanent recession, government is intensifying its regulation, taxation and harassment of regular business people. Business pages are filling up with pleas to government from real-life entrepreneurs. All these people are saying is give freedom a chance.

An example is Seth Gordon, the co-founder and “TeaEO” of Honest Tea, which makes fabulous drinks that come in 16.9 ounce bottles. The tea sells very well but runs headlong into the latest absurdity of regulatory control from the New York mayor’s office.

Supposedly waging war on obesity, Mayor Michael Bloomberg wants to ban for sale in eating establishments all drinks with more than 25 calories per 8 ounces. Honest Tea, founded to be a healthy alternative to soft drinks, misses this mark by 10 calories per serving.

This means that this low-calorie drink is a direct target of the police power of the state. It’s the new prohibition…against tea! Amazing.

This puts the company in a terrible position. They already had purchased several hundred thousand dollars worth of 16.9 ounce bottles, and it seems crazy to throw that away completely a adopt a smaller size, especially given that the regulation could be arbitrarily changed yet again.

In any case, as I read Gordon’s plea for the life of his company, the obvious occurred to me. Let’s say you reduce the bottle size. Thirsty people might end up buying two, thereby defeating the whole point of the regulation, and creating another supposed problem of trash proliferation. Given prevailing environmental consciousness, don’t large bottles make sense?

Now, to be sure, Godon is not sure what the right size of the bottle ought to be. But he is pretty sure that politicians don’t know the answer to that either. “As a beverage marketer, we willingly submit to the unforgiving judgment of the market,” he writes in the Wall Street Journal. “What we did not anticipate was an arbitrary decision to constrain consumer choice.”

There are about a million problems with this approach to controlling obesity. The notion that drinks are the problem is absurd, and, very strangely, the legislation itself seems to exempt milkshakes and liquor. Regardless, the problem of being too fat is as unique to individuals as are the solutions. You can’t force people to be thin, not in a developed economy where leisure is a default, the majority work at desk jobs, and high-calorie food is plentiful.

At the same time we have a nation-wide war against fat, there is another ongoing culture war against too thin as well. Anti-anorexia activists are busy harassing magazines that feature too many thin models, and denounce super-model agencies and beauty pageants for driving girls to absurd lengths to shave off the pounds.

How close are we to have an official nation-wide mandatory pound-per-height ideal that everyone but politicians must adhere to? I tell you, there are people out there who would push the button to make this happen if they could get away with it.

What makes me absolutely nuts is how elected officials today imagine that government should have any power over these matters at all. What does the idea of freedom mean if not the freedom to eat and drink and determine one’s own resulting physique? I would say that same about the pills we take, the plants we smoke, the books we read, and every other aspect of life that is not injurious to others.

A few days before this article on tea appeared, there was another sad article along the same lines, by Henry Juszkiewicz, the CEO of Gibson Guitar. Last year, his office was raided by the G men. The federal agents took 100 guitars, many boxes of raw materials, traumatized workers, and cost the company several millions in profits. They had no clue what was going on.

Why? The reason has to do with some environmental regulation on the use of woods that go into making quality fingerboards. The wood is from India, a regulation that says that the wood must be finished before being imported, whereas Gibson Guitar finishes the wood in the U.S. It further turns out that two different regulatory agencies disagree on precisely how to implement this legislation.

How can any company possibly keep with all the arbitrary laws and arbitrary enforcement? The Gibson company has been fighting hard for its reputation and trying its best to avoid the label of being a bad citizen. But at least it has been fighting!

Juszkiewicz wrote in the Wall Street Journal as follows:

In America alone, there are over 4,000 federal criminal offenses. Under the Lacey Act, for instance, citizens and business owners also need to know—and predict how the U.S. federal government will interpret—the laws of nearly 200 other countries on the globe as well. Many business owners have inadvertently broken obscure and highly technical foreign laws, landing them in prison for things like importing lobster tails in plastic rather than cardboard packaging (the violation of that Honduran law earned one man an eight-year prison sentence).

Plenty of other business face regulatory harassment on a daily basis but never go public with complaints, for fear of being targetted. It is impossible to find any physical product on the shelves that is not subject to thousands of regulatory mandates. There isn’t a service in the above-ground economy that is not similarly regulated.

In some ways, the adaptations that business undertakes ends up discrediting business itself. The new and improved refrigerator, oven, or lawnmower ends up being a degraded project that doesn’t work as well as the old one, but the business fears pointing out it out because it doesn’t want to face the consumer backlash. So they all continue to act as if life is normal.

But life is not normal in the one-time land of the freed. You can investigate this for yourself and observe that reality is exactly the opposite of what President Obama says. Far from making enterprise possible in the first place, the major result of the regulatory state is to establish barriers, introduce restrictions, add an element of fear, and move the rules around in a way that makes enterprise increasingly difficult.

U.S. business today faces a comprehensive and devastating central plan that is systematically driving economic dynamism to a grinding halt. One only needs to compare the innovation that takes place in the relatively less regulated digital world with that imposed upon the physical world that tea makers and guitar manufacturers inhabit.

If there is to be a new tea party, it shouldn’t be dumping tea but dumping the regulators who are trying to restrict our rights to drink it however we want it.


Jeffrey Tucker

Executive editor, Laissez Faire Books

The Daily Reckoning