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On regulation, Adrian Peterson and job creation

Date Published: 01/12/2012

Author: Chuck Brown, Senior Policy Fellow on Rural Issues

ST. PAUL LEGAL LEDGER CAPITOL REPORT

I’ve grown accustomed to, and a little weary of, the woeful tales of abuse that our sainted job creators must endure from nefarious government regulators.

A recent case in point was an op-ed from two legislators last month who likened job creators to an exhausted Minnesota Vikings running back Adrian Peterson ("Let’s give our job creators the help they need", Star Tribune, Dec. 13). Seems all we needed was to give Peterson more rest, and job creators the same, by getting rid of lots of bothersome regulation and by further reducing state taxes.

Well, I’m one former job creator who can tell you we are not saints and our governments are not nefarious. And getting rid of regulators or tying their hands makes as much sense as removing the officiating crew from an NFL game. Somebody needs to throw a flag when a vicious illegal hit is delivered on Peterson.

I spent much of my private sector career managing a canning company in southern Minnesota, and in that capacity I created a job or two, all while being thoroughly regulated.

If the American food industry isn’t the most regulated in the country, then it’s surely near the top. On any given day, I could expect a visit from the Food and Drug Administration, or the U.S. or Minnesota Department of Agriculture. The Minnesota Pollution Control Agency and the Occupational Safety and Health Administration inspectors were also mindful of my existence, as were the U.S. Department of Labor and the Minnesota Department of Health.

Then, of course, there were the usual suspects: the Internal Revenue Service and the Minnesota Department of Revenue. The list goes on and on. At times it seemed the whole world had inspection and taxation authority over me. I had lots of visitors, and to be completely honest, I wasn’t always glad to see them.

Still, I couldn’t then, nor can I now, reasonably argue that much or all of the regulating was unnecessary. There will never be complete agreement between the regulators and the regulated. But the food business, by its very nature — with its potential for risk to human life and health — needs to be regulated. And the folks visiting me were also visiting my competition, thus creating the proverbial level playing field (something Peterson would appreciate).

You don’t have to take my word for it, or depend on anecdotal evidence or horror stories to appreciate the value of regulation. For a primer on the necessity of public oversight in food and drugs, going back at least to colonial laws for inspecting meat in 1641 Massachusetts, I’d recommend reading the “History of Food and Drug Regulation in the United States” on a superb website, eh.net, maintained by the Economic History Association.

The solutions suggested by some legislators to reduce regulation and taxes are not completely unworthy. Eliminating some unnecessary regulation should be an unending effort, one marked by ongoing dialogue and cooperation between the private and public sectors. There also might be merit in recommendations to eliminate the statewide business property tax, although that needs to be just part of a bipartisan, comprehensive tax reform that also raises more revenue for public investments and budget balancing.

But I do take exception to the contention that if we will only get government mostly or completely off the backs of private sector job creators, they will then have certainty and start hiring.

Their certainty argument strikes me as odd, coming as it does from conservative quarters, because it’s government that tends to provide certainty, and free markets are all about dynamism and uncertainty. Free markets are about calculated risk. Those who wait for certainty before investing or hiring often find that when they finally get around to it, the train has already left the station.

So what does move a job creator to hire? Running a business is complicated and a lot of factors come into play, but most business professionals will tell you that taxes and regulation are not high on the list.

What always tops the list is simply customers: customers coming through the front door of your store; customers placing orders with your factory; customers, the only reason a business exists. And to have more customers, we need a strong middle class, and the taxes and regulation that are provided by the public sector is fundamental to the health and welfare of the middle class.
A strong middle class requires a balance between private sector growth and public sector investment. Public investment in education and health care and infrastructure creates well-being, opportunity, economic security, jobs and customers.

And in a final turn on the NFL analogy, we must remember that superstars like Peterson go nowhere without his less appreciated blockers and teammates. Our job creators get all the credit and most of the big pay, but it’s the schools that train their workers, the roads that carry their goods, the water and sewer systems that run in and out of their plants, and systems of commercial regulation and judicial authority that provide a foundation for business and job creation.

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A version of this column originally appeared in the St. Paul Legal Ledger Capitol Report on Thursday, January 12, 2012.

Chuck Brown is a retired businessman, a former City Council member from Olivia and a novelist. He also is a policy fellow on rural issues for Growth & Justice, a policy research organization that focuses on expanding prosperity for all Minnesotans.


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