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Wednesday, August 19, 2009

Truth or (Unintended) Consequences?

Reading today’s Wall Street Journal discussing the ramp-up of regulation enforcement by the Department of Labor reminded me of a television program quite popular several years ago. It was called "Truth or Consequences" and, if I remember correctly, launched the TV career of Bob Barker. The WSJ article described how the Department of Labor will hire hundreds of new investigators (and probably hundreds more support staff) so as to significantly increase enforcement of our many labor laws and workplace rules.

Generally, I believe this is a good thing. We could use a little more enforcement in many areas, what with the billions of dollars being spent by Washington on stimulus projects and the generally laize faire approach of the previous administration. However, this article got me thinking about the "law of unintended consequences", which states that no matter what you thought would happen, something else will probably happen that you hadn’t even thought about. It’s that "something else" that I am concerned about.

In my experience, few business people really object to following the rules that govern their industry. What most do object to, though, are the myriad forms, multiple and often duplicate reports and documents, and other bureaucratic nonsense that the enforcement agencies require. The most frequent complaints I hear from my business clients concern the complexity of the rules, conflicting messages sent by the agencies and the amount of time --- and money --- spent on reporting to the government. And this is just on the federal level. When you add in the state requirements, the burden is mind boggling. Yet, history clearly shows that more oversight means more rules, reports, responses, and investigations.

Right now, most businesses owners and managers are paddling like mad to keep their head above the financial waters. More feeding of the bureaucratic maw will only take time and resources away from actually making more products, delivering better services, or inventing the next "killer app". Can we afford the additional drag on our economy?

More regulation and enforcement will certainly increase the need for lawyers, so I guess the adage "every cloud has a silver lining" certainly applies here. However, I can't help but be concerned that, no matter how laudatory the goal we may be creating costly and perhaps unneeded burdens on the productive sectors of our society. Slower or minimal recovery from our economic ills may be the result, and more and longer lasting unemployment the unintended consequence.

Keep an eye on this as you look for the recovery in your area.

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