George McGovern On Why Politicians Who Haven't Built A Business Are Bad At Regulating

from the good-points dept

With the passing of former Senator and Presidential candidate George McGovern this weekend, the Wall Street Journal reran a 1992 column he wrote about how much he learned from trying to start a business after he'd left politics. TheMoneyIllusion has an excerpt as well:

In 1988, I invested most of the earnings from this lecture circuit acquiring the leasehold on Connecticut’s Stratford Inn. Hotels, inns and restaurants have always held a special fascination for me. The Stratford Inn promised the realization of a longtime dream to own a combination hotel, restaurant and public conference facility — complete with an experienced manager and staff.

In retrospect, I wish I had known more about the hazards and difficulties of such a business, especially during a recession of the kind that hit New England just as I was acquiring the inn’s 43-year leasehold. I also wish that during the years I was in public office, I had had this firsthand experience about the difficulties business people face every day. That knowledge would have made me a better U.S. senator and a more understanding presidential contender.

He goes on to talk about how all sorts of crazy regulations, that may have appeared to make sense to the politicians passing them, were actually serving to create a huge headache for businesses -- often because whoever is writing the laws has no idea what they're talking about:

In short, “one-size-fits-all” rules for business ignore the reality of the marketplace. And setting thresholds for regulatory guidelines at artificial levels — e.g., 50 employees or more, $500,000 in sales — takes no account of other realities, such as profit margins, labor intensive vs. capital intensive businesses, and local market economics.

The problem we face as legislators is: Where do we set the bar so that it is not too high to clear? I don’t have the answer. I do know that we need to start raising these questions more often.

When we talk about Washington DC (and other governments) passing regulations that impact how entrepreneurs and innovators build great new companies, this is the kind of thing that we're worried about. The vast majority of elected officials really have no idea. They pass rules and regulations that sound good and are meant to serve a good purpose, but they rarely take into account the consequences of the regulations they pass or how they'll impact how companies act. This is not to say that there shouldn't be regulations, but that regulators need (a) a much better understanding of business and (b) they need to be aware that the impact of regulations can be stifling. I've never understood why every piece of legislation that will impact companies doesn't come with specific metrics to determine if it's a success and a mandatory review period / sunset provision, in which an independent board is tasked with determining if the law accomplished what it set out to do, and if there were any costly side effects or unintended consequences.

McGovern seemed to discover all that after his political career was over, but with his passing, perhaps we can encourage current politicians to recognize just how big an issue this is today. Especially when we rely on so many new technologies, innovations and services on a daily basis.

Filed Under: business, entrepreneurship, george mcgovern, politics, regulations