The Cost of Red Tape for Small Businesses

 
I think if two government agencies have conflicting regulations, when an inspector from one of them shows up, the business owner should be able to point the conflict out to the inspector and the other agency should have to pay the fine.

5 comments:

J Melcher said...

It's not only small businesses and it's not only conflict between regulators. I worked with a $7 billion dollar per year retailer with branches in California. The CA Air Resources Board (CARB) decided to regulate indoor air quality, affected by formaldehyde fumes, sometimes emitted by cheap, pressed wood/particleboard, sometimes used in cheap flat-pack furniture. The regulation required "certification" that any furniture sold in California be formaldehyde-free.

The regulators expressly, explicitly, expected a retailer to have a physical file cabinet full of physical dead-tree paperwork "in the back office" with "bills of lading" and "invoices" upon which such "certification" could be "stamped". And the store was required to make the files and paperwork available at any time with no notice to CARB inspectors.

Well, in a century with Electronic Data Interchange where ordering, shipment tracking, invoicing and remittances are all controlled and recorded by HQ in another non-California state, all accomplished over decades of effort striving mightily to eliminate the burdens and costs of paperwork in the back office, the CARB's expectations became impossible to satisfy.

I think my company would have lost if we hadn't made alliance with WalMart to push back on this nonsense.

douglas said...

It's not only conflict between regulatory agencies (and that happens in my field too- architecture), but the regulations themselves are so numerous and complex that often a great deal of interpretation is needed to decide what is intended by the wording of the regulation itself. This lays great power in the hands of the regulators as they get to decide the meaning of the rules. In Los Angeles, the building department has an entire 358 page manual for the building department plan checkers to use standardized interpretations of the zoning code for plan checks (I kid you not). If the code isn't even clear to other regulatory agencies, how can they expect it to be clear to the layman citizen?

The entire regulatory apparatus is anti-American to it's core.

David Foster said...

J Melcher..."Well, in a century with Electronic Data Interchange where ordering, shipment tracking, invoicing and remittances are all controlled and recorded by HQ in another non-California state, all accomplished over decades of effort striving mightily to eliminate the burdens and costs of paperwork in the back office, the CARB's expectations became impossible to satisfy."

Easy! Just get the EDI standards modified to include the required certifications, persuade all the manufacturers to provide them, various software systems modified to carry them forward from internal systems, and, finally, persuade the government inspectors to accept the certifications in electronic form. Shouldn't have taken more than 10-15 years.

I wonder if any large businesses have decided that doing business in California is more trouble than it's worth.

Grim said...

I know a guy who got authorized, during the COVID panic, to work from home permanently. His corporation is a major one. He applied for permission to move out of state (since he never had to come to the office again), and was granted it -- as long as he did not move to California, because its regulations regarding employees were not acceptable.

J Melcher said...

David, your plan was basically what we did. Took about 10 months, not years. This, largely and fortunately because we had only two suppliers were in the pressed-wood furniture industry to bring into compliance. (WalMart did it in a year, with over a dozen suppliers) And about 8 of the 10 months, and the most difficult step, and totally expectedly in compliance with Pareto Principles -- were spent getting California regulators to agree to accept an email of the EDI 810 Invoice extract textfile including a code that meant the Vendor promised that some unidentified lab somewhere in Asia had at some unspecified time conducted some sort of test to ensure some level of formaldehyde was not used. Upon demand, and within 12 work hours, the "proof" would be in hand. Or on a screen.

In all the YEARS after the months of work, we never had one demand. As far as I can tell, the whole process was intended as a threat to put certain processes and suppliers out of business, in California and the rest of the nation.