Tuesday, February 07, 2006

Business Climate

This week's Crain's has an excellent article on "Strong City Economy Fails to Create Jobs." In the piece Elizabeth Mac Bride focuses on the climate for small business in the city and writes, "No one knows which sector of the economy will take off in an expansion, but one certainty is that small businesses will create many of the jobs. Stifling those enterprises, as the Bloomberg administration does, means thwarting growth."

Well said. This is, of course, the point we have been hammering home for the past four years. MacBride's story does a good job at highlighting the cost of regulation. In particular, she points out that, "Between fiscal 2002 and fiscal 2005, the fines collected by the Environmental Control Board-a funnel for many business fines-rose 30%, to about $64 million. Complaints of draconian enforcement are legion."

What's new in the Crain's story is the exposure of the administrative cost of regulation. "A 2003 study by the Independent Budget Office found that with the exception of parking violations, the city spends $2.09 on enforcement for every $1 that it collects."

This is a sobering statistic that doesn't, however, factor in the cost of disillusionment and despair in the small business sector. It is hard to deal with the fact that the local government, instead of being an ally, is an adversary to be feared. It's even harder when the mayor is also a successful businessman with a tin ear for the most vulnerable entrepreneurs.