Location: Pantego, Texas, United States

Thursday, October 23, 2008

Jerry Pournelle has a lot of insight into the nature of bureaucracies. Here is an interesting comment that explains why most jobs are created by small companies: companies can't afford to grow beyond a certain size due to government regulations. This situation will get much worse under President Obama, but maybe just a little worse under President McCain.

Incidentally, the Regulatory State seems determined to restrict America to two kinds of companies: those with fewer than 50 employees, and giant corporations with thousands of employees. No one in his right mind would expand a company -- particularly in California but Federal Law is making this universal -- from 49 to 51 employees. The instant one gets to 50 (or 51 depending on the state) a huge panoply of regulations kick in, so many that even if one can afford to comply with them all, one will also need a compliance staff of several employees to make sure one is in compliance. This means that up to 10% of one's work force does nothing productive except keep the owners out of jail. This makes the company singularly uncompetitive when faced with companies that don't have to devote so many resources to complying with regulations. This is probably not what distributionists had in mind.


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