I recall sitting in the green room at Fox News and a very prominent fund manager was in a rush to head to Boston to see his elderly mother. I asked him how many siblings were in his family. He said, "Seven, I mean none, I mean seven, well, actually, my mother was an alcoholic and neglected me back in the 1950's. A loving childless couple that lived on the block took me in, raised me as their own, educated me and that's really my mother who I am going to visit today."
I was taken aback by his story. Imagine a similar situation today. His story would be complicated by a dozen different temporary foster homes, trips to court and endless paperwork. A loving couple wouldn't have had the chance to raise a productive and honored member of society.
Instead, this man has a thriving firm full of employees and has become one of the most respected managers on Wall Street.
I thought of this encounter last winter when we realized that a young girl in my daughter's kindergarten class didn't have a coat to wear. When the parents of another student wanted to subtly buy one for her, the teacher told them that they were prohibited from getting involved due to a Department of Education policy.
Why all this red tape when people are simply trying to do the right thing?
This is one of the things wrong with our country today. We have become overwhelmed with regulation in the wrong places. Veterans struggle for their benefits, Medicare recipients find their doctor's leaving the system, and our children are being left behind.
It's no different in the business world, where new regulations can strangle innovation, growth and productivity.
Regulation Is Killing Innovation
During tonight's State of the Union, the very LAST thing I want to hear from President Obama is anything that has to do with MORE regulation.
Over the past 15 years, almost 60,000 new federal rules have been created - and that doesn't include state regulations. According to the Small Business Administration, compliance with all these regulations alone costs $1.75 trillion annually.
These costs hinder job creation, since the more businesses have to spend on regulatory demands, the less they have to spend on hiring.
Even if a company did have the cash for new employees, many executives are reluctant to hire because they don't know what the regulatory landscape may be down the road and can't make strategic growth plans. For executives, it makes more sense to sit on the money and build up a reserve for what may lie ahead.
Business regulations can also hurt innovation--the key to advancing our world. The opportunity to experiment and make mistakes to figure out what works is what has led to some of the most ingenious creations of our time. But in this age of guidelines and endless red tape, entrepreneurs are beaten back and discouraged by the process, and creativity is left by the wayside.
But those affected by regulations aren't staying silent. This week, a huge Internet groundswell resulted in House and Senate leaders abandoning plans to move forward two pieces of controversial legislation: the Stop Online Piracy Act (SOPA) and the PROTECT IP Act (PIPA).
These anti-piracy acts would allow the government to block access to certain web sites that contained copyrighted content. Founders of companies like Google, Twitter, eBay and Wikipedia led the charge against the reforms that they said could stifle innovation and censor free speech.
Southwest CEO Gary Kelly has also been vocal on how regulations have hurt his business, and is fighting a recent ruling that requires the company to display fare totals that include taxes on its web site.
When you buy a new shirt at the mall, does the price tag show the final cost with sales tax? How about a bottle of wine at the store? Typically, regardless of the industry, the cost of goods and services do not include taxes. I just watched a great interview where Kelly argues Southwest is no different. He goes on to talk about the unnecessary layer of complexity and how much the additional costs will hurt during an already brutal environment.
The freedom to innovate is critical to continuously moving our society forward and growing our economy. If we, as a society, are willing to sacrifice innovation for regulations, then we've just kicked ourselves out of the global innovation race.
And that would have dire consequences that would make the Great Recession look like a walk in the park.
I'll be watching the State of the Union closely tonight to hear the President's ideas for creating a robust, job-creating economy--and listening closely for new innovation-killing regulations and proposals. What will you be watching for?
P.S. Innovation isn't just good for society...it's good for us as investors, too. Investing in the visionary companies behind today's biggest tech and medical innovations is the key to outsized profits. Innovation is the reason my GameChangers readers pocketed 15 double-digit winners in 2011 while the market went nowhere. Start putting my proven profit strategy to work for you in 2012.
Comments (16)
The unfair tax law must be change. Romney must pay hia fair share. Middle class is being destroyed.
Posted by Wayne Ridgeway | January 24, 2012 6:22 PM
Posted on January 24, 2012 18:22
Your reasoning is fatally flawed. When I buy a shirt or a bottle of wine I know the amount of (sales) tax ahead of time and it is always small compared to the price of the item. When I see air fares advertised, the "taxes and other fees" can vary all over the map and may even double the advertised price; particularly if it is a teaser fare. Chasing such "low" fares is a colossal waste of time.
I agree with eliminating truly "senseless" rules; this is not one of them.
Posted by Anonymous | January 24, 2012 6:38 PM
Posted on January 24, 2012 18:38
Whoa...sitting in the Fox newsroom ? Didn't really need to read any further.
Posted by urchin | January 24, 2012 7:28 PM
Posted on January 24, 2012 19:28
I'm waiting for the day when honor and integrity return to the marketplace and make protective and restrictive legislation unnecessary because those in charge regain their morals and serve others as much as they serve themselves. Until then - live with it.
Posted by bills754 | January 24, 2012 8:05 PM
Posted on January 24, 2012 20:05
I'm a big Hilary fan but this article and the Keystone pipeline article are a little upsetting to me. If you want to take children in this era there should be lots of red tape. My sister married later in life and was able to adopt. I'm betting a lot on refineries the (MPC and the new Phillips 66) but I think the pipeline shouldn't be rushed. I don't blame the President.
Posted by michelle | January 24, 2012 8:50 PM
Posted on January 24, 2012 20:50
Hillary: While there are parts of the economy that have too much regulation, the financial meltdown that we have experienced in this country was due to a lack of regulation. If the government had not been asleep at the switch in regulating the big banks and other financial institutions that engaged in reckless investments, such as credit default swaps, Bernie Madoff and other scam artists, we would not be where we are today.
And please don't tell me about Fox News. It has no credibility.
Posted by David Rubin | January 24, 2012 11:59 PM
Posted on January 24, 2012 23:59
Regulations are like rules in a football game. Lousy teams whine that they are just so hard to keep track of and that the referees are unfair. They try break and bend them to "win"
Posted by Jesse | January 25, 2012 5:42 AM
Posted on January 25, 2012 05:42
Pardon me if I'm placing this in the wrong place, but does anyone on this page know where I could find infomation on a firm in the Us advertising an IT sales employment? The firm is LTJ Management, LLC located at 900 Congress Ave., Suite L-150, Austin, TX 78701 (512) 895-9500. I'm transferring to the US shortly and any support would be appreciated. Thank you.
Posted by Idella Delbridge | January 27, 2012 12:50 AM
Posted on January 27, 2012 00:50
Canadian shale and tar sand petroleum is possibly the dirtiest energy source on earth. The only thing dirtier are the Koch brothers who would profit in the billions from the Keystone XL pipeline.
Currently, Canadian crude can be pumped only as far as the U.S. Midwest, where a crude oil oversupply is keeping regional oil prices low. The Keystone XL would clear that bottleneck, send Canadian oil to the Gulf Coast and open access to world markets, creating a massive business opportunity for tar sands players.
The Koch's Flint Hills subsidiary already has an oil terminal in Hardisty, Alberta, the starting point of the Keystone XL. It sends about 250,000 barrels of diluted bitumen a day to a heavy oil refinery it owns near St. Paul, Minn., making that refinery "among the top processors of Canadian crude in the United States," the company website says.
Most of Alberta's heavy oil is currently shipped to the Chicago area or to Cushing, Okla., the world's largest oil storage facility and the point where prices are set for U.S. crude. Stockpiles at Cushing are depressing crude prices in the country's midsection below the global benchmark and pinching profits across the entire tar sands supply chain.
The price spread on Tuesday was nearly $25, with the global benchmark, known as the Brent crude oil marker, trading at just below $100 and the Cushing price, known as West Texas Intermediate or WTI, settling at a one-year low of about $76. "Once this [Cushing] bottleneck is relieved, the expectation is that WTI will appreciate to something closer to world oil prices," said Friess of UBS.
Hmmm, my calculator says that $24*250k*365 = $21.9B annually of dirty profit.
Posted by Richard | January 27, 2012 1:01 AM
Posted on January 27, 2012 01:01
Hillary asks us to say yes or no on did Obama do the right thing on the pipeline - but it is not black or white. He only put off approving it - he did not disapprove it. He just said he would not be railroaded into approving it by the house freshmen who have not yet learned to govern by compromise. I believe he will approve the pipeline with a few minor changes in its proposed route to avoid some environmentally sensitive areas. So I heartily approve of Obama on this - yes don't make a hasty decision, and yes allow for some minor route changes. But we need the pipeline and he knows it and will without any doubt approve it once the route gets settled.
Posted by John Harris | January 27, 2012 10:32 AM
Posted on January 27, 2012 10:32
Oh and on regulations: America's businesses are hardly being killed with record profits and earnings over the last few years. Sure get rid of unneeded regulations but business (and wall street) obviously need to be regulated. Left unregulated business historically did horrible things: child labor, enslaved workers to the company store, ground up rodents in your hamburger - well history in this country is replete with may horrors of business left unregulated to utter unbridled greed.
Posted by John Harris | January 27, 2012 10:38 AM
Posted on January 27, 2012 10:38
Dear Hilary,
It is not regulations that's killing America. Don't blame our President. He inherited this messed up economy. 60,000 regulations over the last 15 years is an average of 4000 per year. There have been less than 150 under the Obama administration...and that's over 3 years!
Hillary, this kind of rhetoric (bordering on Yellow Journalism) you are engaging in, is not good. Stick to the stocks. The GOP is the divisive entity that threatens America's longevity. Regulations are necessary. Even business concedes that some new rules under President Obama were long overdue. You need to get behind the President as long as he is President.
Regulate yourself. Be American! That is what will move this nation forward.
Remaining patriotic,
M
Posted by M. A. Johnson | January 31, 2012 9:26 AM
Posted on January 31, 2012 09:26
Greed and being un-american by corporation is killing America. We do not want to go back to the 19th century or policies that got us in this mess. Companies have not been that profitable ever
Posted by Simon Biagui | February 9, 2012 6:47 PM
Posted on February 9, 2012 18:47
Regulation is killing America? LOL! What in the world are you thinking? Don't let the facts get in your way. The lack of regulation under the Bush Administration got us into the mess we are in now! The crooked bankers, insurance companies and wall street thieves went wild and look what happened to the economy---a very bad stock market crash and the worst housing market in years with tons of foreclosures due to the stupid, crooked sub-prime mortgages. Leave it to the radical right wing conservatives to keep making the same mistakes that pushed us to the brink of the abyss!
Posted by Doug Piazza | February 9, 2012 7:27 PM
Posted on February 9, 2012 19:27
Wow, this post is nice, my younger sister is analyzing these kinds of things, thus I am going to inform her.
Posted by Evelyne Dredge | February 10, 2012 9:05 AM
Posted on February 10, 2012 09:05
SOPA was first and next we get ACTA which is much worse in Europe particularly. If you work with YouTube, Myspace or have ever shared a mp3 clip you will soon be a criminal.
Posted by Shayla Comparedi | February 11, 2012 7:32 AM
Posted on February 11, 2012 07:32