Subscribe to Making Rain by Email

Archive for the “Unintended Consequences” Category

Well, Obamacare has passed muster with the Supreme Court.  Alas, alack.  Let the regulatory onslaught begin.
 
My feeling is Obamacare will be even worse for the small businessman than expected.  Here’s why:  TORTS.  Pandora has opened her medical box.  The lupine tort bar is salivating over the hopelessly recondite ferrago of bureaucratic processes delineated in the almost 400 new governmental entities created by this law.  My fear is that this well-meaning, but wrong-headed, 2700 page law will become the lawyer’s full employment act, a wanton feeding-frenzy of tort litigation.
 
In a July 9, 2012 article Crains’ reports (p. 3) four different federal agencies (the IRS, the Department of Labor, the Department of Health and Human Services, and the Department of Housing and Urban Development) are in the process of writing thousands of pages of regulations listing new employer obligations.  Benefits lawyers report a proliferation of potential HR liability around record-keeping, reporting, qualification, and payments.  It is a veritable mine-field of potential litigation.
 
Peter Marathas, a partner at Proskauer, states,  “The statute has an extremely complex regulatory framework that adds layers onto what  we already have.  It leads to an increased burden and increased liabilities.”
 
This is especially threatening to our small business community.  We simply don’t have in-house the cadre of administrators to deal with this onslaught, but I guarantee you right now an increase in accounting expense and lawsuits.
 
Rosina Rubin, CFO of Attitude New York, a limousine company with 60 employees, states simply, “I think that we’ve created some jobs for lawyers and accountants.”  I think you’re right, Rosina.
 
Yet, worse even than the administrative burden, is the further dampening of animal spirits that may well descend on our entrepreneurial world.  New ideas and creative risk-taking flourish in a petrie dish of freedom and open-ended possibility, not in an increasingly proscribed dirigism of tightly-controlling, top-down governance.  At a certain point entrepreneurs may choose to not grow—to subtly go on strike from the over regulation of these new legal strictures.  Ayn Rand’s Atlas Shrugged fictionalized this very event.
 
John F. Kennedy stated in his last State of the Union Address (Jan. 14, 1963),  “A police state finds it cannot command the grain to grow.”
 
Thank you, John.

Comments 15 Comments »

Corporate Rain International on Facebook