My Photo
Blog powered by Typepad

Become a Fan

« Why Business Is Not Investing | Main | Business hoarding its money »


D. P. Lubic

I can't really comment on whether regulation or the threat of same is having a chilling effect on business. What I do know is that a friend of mine told me about business in Harpers Ferry, in what was then Virginia, at the time of John Brown's raid in 1859.

This friend was a ranger for the US Park service in Harpers Ferry, and one of his jobs was to talk to people about the town, tell stories about it for the modern audience. One of them was that Harpers Ferry was a boomtown in 1859, with hundreds of government employees in the armory there making $30 dollars a month when the average American farmer had a cash income of $125 for a whole year.

This was a lot of money for that time coming into a relatively small place, and a lot of business owners tried to cash in on it, opening up various shops such as opticians shops, dry goods stores, boot shops, and lots and lots of saloons. The business situation was very competitive; the average life expectancy of a business was only about 6 months.

Jump ahead 150 years to today. Until relatively recently, if you spoke to someone from the Small Business Administration, he would tell you that about 50% of all small business start-ups in any given year would fail in the first year, and up to 90% would fail in the first five years. (Recently, there have been studies to suggest that the failure ratio is 33% in the first year, another 33% in the first 5, and maybe 33% would make it to 10 years, but all these new numbers sound a little optimistic to me.)

That traditional failure rate, particularly the 50% crash rate in the first year, works out pretty close to that 6-month business life expectancy in 1859. And in 1859, there was no income tax, no state sales tax, no business & occupation tax, no unemployment tax, no Social Security tax, no Medicare tax, no workers compensation tax, no minimum wage law, no overtime law, no child labor law, no enforced medical leave law, no health code, no building code, in short--no nothing. . .

What this tells me is not that regulation hurts or benefits business, but that the secret of success in business is where it has always been--in the brains of the management, combined with a bit of luck in being in the right place at the right time. . .esxentially, the same secret of success back in the days of the ancient Phonetians so long ago.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.


Post a comment

Your Information

(Name is required. Email address will not be displayed with the comment.)