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Legally Destroying the Economy

Freaking Heck's picture





 

#800000;">Originally posted at: CapitalistExploits.at

Over-burdensome regulation and massive liability exposure is stifling business and creativity, slowing the flow of capital globally and stagnating economic growth.

Let's look at the facts...

The IMF has downgraded its forecasts for global economic growth from its July World Economic Outlook Update. The world economy is now expected to grow at 2.9 percent in 2013, down from 3.1 per cent in the IMF's July Update. The forecast for 2014 has been downgraded to 3.6 per cent from 3.8 per cent.

Here's how the IMF expects major economies to perform this year and next year:

  • United States 1.6%, then 2.6%
  • Euro Area –0.4%, then 1.0%
  • Germany 0.5%, then 1.4%
  • France 0.2%, then 1.0%
  • Italy –1.8%, then 0.7%
  • Spain –1.3%, then 0.2%
  • Japan 2.0%, then 1.2%
  • United Kingdom 1.4%, then 1.%
  • Canada 1.6% ,then 2.2%

Impressive? Hardly.

Not surprisingly, The IMF further notes that emerging market economies will still continue to account for the bulk of global growth in 2013 and 2014. (We've recently backed a new website that covers the emerging and frontier markets)

What's causing this slowdown? One of the culprits is burdensome and incomprehensible regulation.

In the US over-regulation and the fear of "guilty until proven innocent" has had a devastating effect on small business. A recent survey showed that 75% of Americans said they associate regulations most with unnecessary red tape, restrictions that lack common sense, or higher costs for American goods.

Where does all this red tape come from?

According to the American Bar Association, in the United States there are currently over 1,268,011 million licensed attorneys. The ABA says that approximately 8% of them work in private industry. That's over 100,000 attorneys working in US businesses.

For those wondering why the US government is shut down, mired in pointless stalemate again, and again, and again, I submit the following:

More than twice that percentage, roughly 18%, or over 228,000 work in government! The split is roughly 1/3 each for
federal, state and local government according to the US Bureau of Labor Statistics (BLS). These are 2010 numbers by the way, so it's likely only gotten worse!

In regards to elected officials in the United States, according to the Congressional Research Service 170 members of the House and 60 Senators are attorneys.

Out of a total of 435 U.S. Representatives and 100 Senators (535 total), attorneys comprise the biggest voting block of one type, making up 43% of Congress. Sixty percent of the U.S. Senate is attorneys. 37.2% of the House of Representatives are attorneys.

There are 81 Republican attorneys in Congress who list "lawyer" as their profession. There are 123 Democrat attorneys in Congress that list "lawyer" as their profession.

One could argue that those that make the laws should be versed in the law. Fair enough. But, on the flip side this has resulted in monstrosities like The Patriot Act. It's 342 pages long.

Then there is the IRS tax code. According to the CCH Standard Federal Tax Reporter, as of 2013, it now takes 73,954 regular 8-1/2" x 11" sheets of paper to explain the complexity of the U.S. federal tax code!

#131">NTU Policy Paper #131, A Taxing Trend: The Rise in Complexity, Forms, and Paperwork Burdens, reports that:

"The most recent estimate of the current paperwork burden generated by the Treasury Department, nearly all accounted for by the Internal Revenue Service (IRS), now totals 6.7 billion hours, according to data from the Office of Management and Budget (OMB). That is the equivalent of about 3.35 million employees working 40-hour weeks year-round with just two weeks off. Incredibly, that is more than the number of workers at the
four biggest retailers among Fortune 500 companies – more than all the workers at Wal-Mart Stores, McDonald’s, Target, and Kroger combined! It’s more than triple the number of workers employed at the top four banks – Bank of America Corp., Wells Fargo, Citigroup, and J.P. Morgan Chase & Co."

It's no wonder that economic growth has ground to a virtual halt!

We have friends and colleagues in all corners of the world...London, Hong Kong, Singapore, Tripoli, Dubai, Athens, Taipei, Perth, Manila, Ulaanbaatar and even Washington DC. Most of them are entrepreneurs, freelancers, or business leaders in some shape or form.

They contact us regularly to keep us abreast of what they're up to, and provide us perspective on what's happening in their neighbourhood. Most of the time it's fairly normal stuff, but once in a while we hear of something that's just too ridiculous, and to relevant not to shine a light on.

First, apologies to our attorney friends. We're not blaming you for all our ills, but certainly the profession in general plays a large role in suppressing creativity and slowing business down.

In speaking to one of our colleagues recently, who shall remain anonymous, they relayed the following example to us:

"I can barely even give property by property data for my investors any longer. I've been working with lawyers all week on how to provide data. We wasted 5 hours discussing what footnotes are needed to accompany a phrase in our corporate presentation, "unlock substantial value in our development assets."

They hit me with the following:

  • is there value there?
  • is it substantial?
  • is there a 3rd party that we can pay to prove that?
  • what are the risks to the company if the value is only moderate and not substantial?
  • how will we unlock it?
  • if it will not be immediately unlocked, maybe we shouldn't use the active
    tense and instead say "we hope to one day potentially unlock some of the latent proposed value that may be in property assets that we believe we control, assuming the following set of circumstances and conditions are
    reached....."
  • are development assets really what we claim?
  • can you call them development assets if you don't yet have the permits to develop them?"

Our colleague then commented, "You should do an article on how the meaning of one 8 word sentence wasted my whole afternoon!" GREAT idea!

Now some of the questions posed by the attorneys in the above example are reasonable. As investors we want to know the companies we are invested in are doing their homework and reporting accurately. But, this should clearly illustrate the inefficiency of our current system.

I've cited US statistics in this post, but most western governments are suffocating their citizens with needless regulation and oversight, much of which is really just a direct result of the fact that all of those attorneys NEED SOMETHING TO DO!

As a point of law, all people are presumed to know the law and ignorance of the law is not a valid defence. I challenge anyone reading this, attorneys included, to explain to us HOW society is supposed to function under this growing and needless repression?

- Mark

"Law and order exist for the purpose of establishing justice and when they fail in this purpose they become the dangerously structured dams that block the flow of social progress." - Martin Luther King, Jr.

 


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Wed, 10/16/2013 - 16:27 | Link to Comment Fishhawk
Fishhawk's picture

@MachoMan:  You almost had the right idea: there is indeed a regulator, one who is intimately involved, who can provide just exactly the right amount of regulation.  It is called the free market, where every consumer gets to vote with his money.  Fraudsters soon discover that in this age of rapid dissemination of information, he has no customers.  Government currently serves to support this fraudster, impose controls on those who would provide competitive alternatives, and protects him from lawsuits and criminal trials.  So we don't need more regulation, we need less, or none.  Let the market decide.       /s/

Fishhawk

Wed, 10/16/2013 - 15:25 | Link to Comment MachoMan
MachoMan's picture

You're complaining about a natural occurrence in the system.  In order for competition not to lead to punitive consolidation of power, there must be a market regulator who imposes competition upon the market participants.  However, there is no clear cut line as to how much this regulator should be involved.  As a result, we're constantly testing/breaking the line (or more accurately, the market regulator is quickly corrupted and fails in its mission to demand competition).  If you really want to fix the issue, then figure out a system whereby a market regulator is not needed, but which also realizes maximum efficiency of resources.  [hint: no other human has managed to do it].

Yes, we have too much regulation...  but this is the inevitable conclusion to the consolidation of power.  Humans are incapable of walking the tightrope between too much and too little regulation for very long...  we always fall off.

Wed, 10/16/2013 - 14:50 | Link to Comment NEOSERF
NEOSERF's picture

Growth has ground to a halt because there is no wage growth but there is price inflation and increased taxation...net change is less disposable income.  Less retail demand means less Capex spending...in a nutshell.  Expect this new normal to continue until the last boomer sells his house to finance his retirement.

Wed, 10/16/2013 - 15:16 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Ignore the paper bullshit.  In order to actually do or make anything, you need to burn some energy.  Unless the energy available for consumption starts increasing, there will be no growth.  In fact, we may have a problem simply maintaining our current quality of life as it is.

Please, enough with infinite growth meme.  The laws of Nature and physics don't work like that.

When you can print it's very easy to "solve" a fiat money "problem".  A calorie problem is something from which there is no escape, especially if we continue to mis-allocate and mal-invest the remaining resources that we have.

Tue, 10/15/2013 - 21:35 | Link to Comment Wilcox1
Wilcox1's picture

It seems fairly obvious that regulation and the chilling effect of liability explain the position of the 0.7% and the plight of the 99.3%.

Tue, 10/15/2013 - 21:31 | Link to Comment snblitz
snblitz's picture

I do not mind people and their government destroying themselves or each other. I just prefer they and their crazy ways are not used to destroy me.

Tue, 10/15/2013 - 21:13 | Link to Comment Tom in AZ
Tom in AZ's picture

Overburdened my ass. What crap.

Tue, 10/15/2013 - 20:58 | Link to Comment sethstorm
sethstorm's picture

Not surprisingly, The IMF further notes that emerging market economies will still continue to account for the bulk of global problems in 2013 and 2014.

FTFY.

 

 

Tue, 10/15/2013 - 20:01 | Link to Comment Seer
Seer's picture

YOU DUMB FUCKERS!

Perpetual growth on a finite planet isn't possible!

Growth.  Growth.  MOAR growth!

You all are just looking for YOURS, to grab from tomorrow so you can continue to suck off the future.  And when there's no more what the fuck do you think it'll look like?  Or, do you think that "regulations" are keeping us from finding out that the planet is infinite?

How much growth do you want?  5%?  Well, that would mean a doubling of economic activity in 14 years.  And then there's China and their 7+% growth targets- TEN YEARS TO DOUBLE, and then after ten years, then what?  double down again?

EXPONENTIAL FUNCTION.  If you don't know what the fuck this implies and you're demanding growth you need to STFU.

And NO, I'm not "pro" "regulation.  Got NOTHING to do with it.  All that shit/talk just talks around the fact that we're operating under a false premise.  Humans, as the folks penning this piece, are DECEPTIVE.

Tue, 10/15/2013 - 19:53 | Link to Comment ramacers
ramacers's picture

bring on the crimson tide.

Tue, 10/15/2013 - 19:00 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

More, less, Industry really needs the right regulation.

 

WS needs Glass-Steagall.  If you cannot get that, then bury NYC with 1000s of feet of new regulation.  WS Banksters should not be able to pick up a pencil without being regulated.  Regulate them like prisoners in the Fed Pen, where they should be.

Tue, 10/15/2013 - 19:34 | Link to Comment rationaldemocracy
rationaldemocracy's picture

No way to regulate wall street..and it's not the job of the government anyway. Clothing ,feeding, providing accessible housing etc is where government intervention really  should be focused on. The government needs to do something about the number of poor people in this country. Leave wall street to the PHd's to figure out.

Wed, 10/16/2013 - 15:13 | Link to Comment STP
STP's picture

That's one of the dumbest comments I've ever read here on ZH!  Are you sure, you're not MDB in disguise?  Who the fuck says, I got to pay for the breeding of a whole, friggin' GIANT entitlement class?  Did you know, that California distributes $645 million dollars a MONTH in FOOD STAMPS!!!!  How fucking crazy is that?  It is NOT FREE.  Somebody has to pay for it.  And as far as Wall Street, leave it to the Phd's to do what?  Run the BIGGEST FUCKING CASINO on the PLANET?  And what are they doing for the Main Street Economy???  ABSOLUTELY-FUCKING-NOTHING!!!   Here's a clue:  They get free money, to go out and gamble, every month, from our Government and it's called QE - Forever!

Clothing and Feeding and providing accessible housing is the Government's job?  FUCK YOU, IDIOT!

Tue, 10/15/2013 - 20:07 | Link to Comment bunnyswanson
bunnyswanson's picture

New POOR people ARE who made the NEW RICH.

 

 

Tue, 10/15/2013 - 19:52 | Link to Comment shovelhead
shovelhead's picture

I'll just assume this is an attempt at humor.

Tue, 10/15/2013 - 20:00 | Link to Comment Dick Buttkiss
Dick Buttkiss's picture

It better be, or I'm calling in the government to provide 24/7 food, shelter, and clothing for him.

I believe FEMA is building these facilities as we speak.

Tue, 10/15/2013 - 22:14 | Link to Comment rationaldemocracy
rationaldemocracy's picture

and you think that there is something wrong with what I suggested? why are we dealing with wall street hijinks when when could be feeding, clothing and educating our nation...like true Americans. This is what really gets to me, the debt celling for example - is this really an issue? or are republicans denying funds that could help tens of millions of people ?

 

Wed, 10/16/2013 - 15:23 | Link to Comment LawsofPhysics
LawsofPhysics's picture

The government should try to simply start with enforcing the rule of law.  Where's Joh Corzine you dumb fuck?  Many people would be able to afford many things if the bundler for Obama hadn't stolen their savings.

What an ignorant fuck.   The only thing the government should be doing is defending our boarders and insuring that there are real fucking consequences for bad behavior.  Show me that they can do that and preserve the republic marketplace and then we'll talk.  The fundamental problem is those same bad actors have taken over the government and have emptied the treasury into their own pockets.

Fraud is now the status quo, nothing changes until the moral hazard is put back in the bottle.

Go long black market and sharecropping, beat the rush...

Wed, 10/16/2013 - 16:13 | Link to Comment RichardP
RichardP's picture

The only thing the government should be doing is defending our boarders ...

The government is doing that isn't it - through its failure to expel them?

Wed, 10/16/2013 - 14:33 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

I don't really see how removing any restriction to WS Banksters performing crimes helps in anyway people on welfare or people who have no job?

Tue, 10/15/2013 - 18:54 | Link to Comment Westcoastliberal
Westcoastliberal's picture

The U.S. government is working hand in hand with huge corporations to eliminate small business.  The huge companies have dozens of lawyers on staff, so complying with (or ignoring & paying pittance fines) are not problem for them....small biz has no such legal power and even a small fine could jeopardize the biz so why start it in the first place.

Most jobs are created by small business, so at a time when huge corporations offshore, automate, or just degrade service, small business can't take up the slack.  It's intentional and must stop.

Tue, 10/15/2013 - 20:56 | Link to Comment sethstorm
sethstorm's picture

The problem is that those jobs are less stable and offer less benefits compared to other categories.

Fukushima in its current state is more stable than any small business.

 

Tue, 10/15/2013 - 20:47 | Link to Comment Stuck on Zero
Stuck on Zero's picture

This is all part of the grand historical march to a Tainter collapse. (http://en.wikipedia.org/wiki/Joseph_Tainter)

 

 

Tue, 10/15/2013 - 19:56 | Link to Comment Lord Koos
Lord Koos's picture

Yep, for example you don't find the energy corporations suffering a lot from too much regulation.

Tue, 10/15/2013 - 20:22 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

Large corporation is benefit from ability control of market place, create artificial scarcity with help of government regulator.

Wed, 10/16/2013 - 15:24 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Bingo, it is and has always been about power and control, period.  For example, about three banks control every aspect of the housing "market".

Wed, 10/16/2013 - 16:22 | Link to Comment MisterMousePotato
MisterMousePotato's picture

I live in a old, small, Sierra Foothills town.

One day, I decide to pay the water bill in person, so I go to city hall. While waiting for the transaction to complete, I idly picked up their 'Welcome to Ye Olde Seirra Foothills Town' brochure sitting nearby.

Homemade. 8 1/2 x 11 pages printed landscape front and back, and folded. Probably 20 - 26 pages altogether.

A few of the pages were names, phone numbers, and addresses, and a one-paragraph history, but the bulk (maybe a couple dozen pages) were rules and regulations on opening a business: This permit and that permit, this form and that form, this department and that department, this hearing and that hearing, this approval and that approval, this inspection and that inspection, this application and that application, this review and that review, this appeal and that appeal, this notice and that notice, etc.

Seriously. I read only about half of it before I concluded that a person would have to be mad to open a business here.

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