Sunday, June 17, 2012

Red Flag Warning: Regulation-A noose about our necks.

A dear relative of the Watchman is selling their beautiful home. It has been perfectly staged with just the right amount of pictures, nicknacks, and furniture. The curb appeal is one to die for, attractive and inviting. The area is in a well maintained and kept community owning to a home owners association (HOA). Therein lies the problem. HOA regulations killed their house sale.

A good offer was made and accepted, contracts signed, and it looked like the deal made in heaven. Then the buyer's backed out. Why? HOA regulations prohibited over night parking of vehicles on the street or driveway. Yes. You read that right. Parking regulations by an over agressive HOA blew a contract during one of the worst housing markets in American history.

How did this HOA protect their member's values by such petty and unreasonable regulation? Why do the member's put up with such regulation? No wonder the area has trouble with sales when potential buyers read the HOA regulations their eyes glaze over and bolt for the door. Another sale lost. The longer homes stay on the market the lower the final price, thus lowering the values of all homes in the community. In some cases, given the unemployment or underemployment rate, potential for a home sale to transition into a foreclosure is increased, again, creating lowered values for the HOA members.

The members need to rally against such regulations in their own self interest. Regulation is stifling their business interests, creating conditions where potential sales are lost. While some regulation is warranted, such as junk accumulation in yards or painting a house a hideous turquoise with orange trim, to keep a community in good appearances, other regulations are just plain stupid such as the parking rule described above. Let's face it, over-regulation is just as evil as no regulation. Regulation is becoming a noose about our collective necks.

The above story is a micro lesson at the individual level. The same can be said of the macro level, our local, state, and national boards of directors continue to likewise create ever new and cumbersome laws and regulations. Again, to be fair, some regulation is necessary and appropriate. The original big ten, found in the Bible, were pretty good basic laws for society. Where the Jewish people went wrong was building a set of regulations for every tiny facet of life, down to the number of steps one could take on the sabbath, that they became slaves to the rules and lost sight of the ultimate rule maker. It took the coming of Jesus to rectify the problem and simplify the rules of engagement.

Fast forward to the 21st century. Today over-regulation is stifling our collective "house selling". At every turn business faces a vast array of rules, regulations, and laws that encumber productivity. Even our government operations are affected by excessive rules. The President wants greater hiring of federal workers, but the regulations to do so are so arcane, it takes a year or more to recruit a janitor.

The Watchman recently was curious about what it would take to start up one of those mobile hotdog stands seen outside of department stores. In his county, before one hotdog could be sold, permit fees of $1,200+ would have to be paid to the government overseers. No wonder self-employment is falling like a rock. The application forms were complex and detailed nearly every small aspect of the proposed business, down to the size and shape of the sinks based on an arithmetic calculation of the largest pot used!

We may not be able to escape all regulation, and as previously stated some regulation is indeed important to have in a community. However, the community needs, just like the HOA members, put their collective foot down on run away regulation. In the next few months American's will have such an opportunity. Election 2012 is that moment when we make that choice. Irwin Stelzer wrote in the Weekly Standard a comprehensive view of that choice:
"In the end the course of the American economy will be determined not in Berlin, but in the voting booths of America, where voters face a choice, not an echo - a choice between a candidate who believes, really believes, that America's future prosperity depends on an expansion of the public sector, and one who seems more likely to see our salvation in unleashing the private sector by reducing regulations and reforming the tax system" Stelzer, Irwin M. (2012). The Buck Stops Over There: Blaming Europe for the U.S. Economy. 25 June 12. The Weekly Standard, Vol 17, No39.

Indeed, no clearer choice do American's have during this election. The question remains, do we tear off the noose or pull it yet ever tighter?

(Updated to correct title format)

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