Monday, January 12, 2009

The dread scourge of unlicensed Christmas desserts

Hello, all! Unfortunately, my ill-fated holiday season sapped a lot of my energy, so I’ve been out of action for a bit. It’s good to be back.

It’s always comforting to know that the government is protecting us from nightmarish menaces like this: (Hat tip: Hit and Run)

Shasta County health officials are cracking down on an 86-year-old disabled World War II veteran who has been selling homemade fruitcakes for more than a decade.

The Department of Environmental Health cites an obscure law banning food businesses in private homes.

Jack Melton of Redding gave away many of his pecan-filled fruitcakes. But health officials saw a small handmade window sign offering some for sale.

Health specialist Fern Hastings says Melton must use a commercial bakery that has passed a health inspection even if he gives his cakes to the public.

The threat posed by elderly World War II veterans with access to unlicensed baking equipment cannot be overstated. Back when I was in high school, my Uncle Bob died tragically when he was decapitated by a piece of rye bread my grandfather had recklessly over-toasted. Remember the glass pane scene in The Omen? Just like that.

This is a nice example of the numerous little things the government does to inhibit small entrepreneurs- remember, Melton ran afoul of a prohibition on the distribution of cakes not made in a “commercial bakery.” A lot of government restrictions on business, combined with things like zoning laws, serve the purpose of suppressing forms of entrepreneurship that would otherwise be accessible to huge swaths of the population, including many people too poor to invest in any sort of new production equipment or training, simply using equipment and skills they already have- running a jitney service with your own car, cutting styling hair out of your own home, fixing appliances and machines in your garage, and so on. (See also Wendy McElroy on cottage industries.)

Even when such activity is not illegal, the government can often make it such a pain in the ass to comply with all the bureaucracy and regulations that it isn’t worth it, or is too daunting a task to get started on. (Or is done off the books, which creates a risk of punishment and leaves the businessman without access to the courts.) It’s often pointed out that, due to some of the fixed costs involved, regulatory compliance often disproportionately burdens smaller firms. This factor would become most extreme in a one-man business, especially if the entrepreneur is poor and using household goods as capital.

Regulation also poses a particular barrier two entrepreneurial efforts by the poor in another way, which I haven’t seen mentioned as much. If your childhood education was of low quality, you’re at a disadvantage in researching and dealing with all the rules that apply to you. This is even more of a potential problem if you were born elsewhere and English is not your first language.

The example seen here, baked goods, is another obvious candidate for something many people could do- plenty of people know how to cook, almost everyone already owns an oven, and necessary materials are a few dollars at the grocery store. Time requirements are not overwhelming- you don’t have to sit continuously by the oven while you’re baking something- so it’s something that can be done by a homemaker or someone who already works out of the house. It’s also an area where average people with no special training can often produce products that are better than most of what is available in stores- my mother routinely made cookies much better than what the grocery had, for instance. And, of course, the very nature of the operation provides a built-in incentive for honesty and safety- your customers know where you live. You’re not going to make a living at it, but it’s certainly a way many people could supplement their income.

Doing something like that probably doesn’t occur to all that many people. Most people don’t sit around trying to figure out ways to run businesses from their house or engage in other small-scale local entrepreneurship, of course, and so don’t directly feel the burden of not being allowed to, but I suspect that is itself largely a product of the legal environment.

People imitate successful examples. In the sort of highly regulated environment that ensnared Jack Melton, positive local entrepreneurial role models are discouraged or prevented from arising in the first place. If the economy suddenly became laissez-faire, most modern Americans still wouldn’t start looking around for new, independent forms of trade and production that they could pursue, because they haven’t seen it and don’t think of it themselves. However, simply allowing the few that do hit upon the idea on their own to succeed unmolested will show more people that it can be done and inspire more people to make their own attempts, which will create more positive examples, and so on and so on until doing it no longer strikes a people as odd. In such a culture, the legal regime we have now would seem absurdly constrictive.

If large numbers of people started engaging in small-scale entrepreneurship of this sort, alone or in small groups, many established firms would start to feel the pinch in two ways. There would be a horde of tiny competitors nibbling away bits and pieces of market share. Further, some people who start out working from their home or garage may grow enough to become bigger contenders in their field, and thus a rival to the established players. In this respect, many regulations that discourage small-scale entrepreneurship have an effect much like one of the effects of minimum wage laws, which can make people with extremely limited skills unemployable and thus unable to get work experience and skills that would make them more competitive workers. Likewise, if you have little business experience and little capital, the regulatory state makes it harder to acquire more of either. The bottom rungs of the ladder have been sawed off.

I think a number of fields in the economy, especially many services and household goods, would be considerably more competitive with these forces unleashed, with newer firms rising up to challenge incumbents at an accelerated rate and a relentless swarm of small-timers and part-timers forever gnawing away at the edges. Of course, no one likes being gnawed at by relentless swarms of things, least of all the people already on top with the most to lose, so there are numerous businesses with a vested interest in preserving or strengthening the current system, and the means to get it done- largely, in one of life’s nasty ironies, thanks to the aid of their alleged foes.

I’ve got a bit more to say, but his has become rather long already, so I think I’ll save it for another post.

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Michael Price said...

Another way that larger businesses benefit is the lower wages resulting from the lack of alternatives to wage employment.

Anonymous said...

"They wont take me alive"

A quote from The Mad Pumpkin Roll Maker

Anonymous said...

I did it and I have no remorse. I made and sold pumpkin rolls this holiday season and I'll do it again.

The Mad Pumpkin Roll Maker