The Fruits of Bureaucracy can be Poisonous

Nothing demonstrates the passing of the capitalist, entrepreneurial spirit from parents to children better than lemonade stands. Many of us had lemonade stands as children, which gave way to car washes in high school to raise funds for everything from a new video game system to a school trip. This productive spirit of entrepreneurship should be fostered and respected, but from Wisconsin to Georgia, children are being offered a different message. Fox News reported that police in Midway, Georgia recently shut down a lemonade stand operated by three girls owing to the fact that the girls did not have a business license or the required permits. According to the police, the young entrepreneurs needed a business license, peddler's permit, and food permit to operate a lemonade stand, even on residential property. Such a license would have cost $50 per day or $180 per year. In a similar scenario, police in Appleton, Wisconsin shut down a kids' lemonade stand being illegally operated by a 10-year-old girl and her 9-year-old sister. A police officer informed the Wisconsin children that their lemonade stand was illegal, owing to a new city ordinance. However, the Chicago Tribune reports that the police later apologized to the family for the officer's behavior, and Police Chief David Walsh said that he would make sure that it would not happen again. Unfortunately, the problems associated with this sort of phenomenon run much deeper than what appears on the surface. Further than destroying the productive, entrepreneurial spirit in children, the labeling of youthful entrepreneurs as criminals illegally selling substances on residential property is enough to warrant shock from even the most fervent defender of government bureaucrats. As the police in Appleton, Wisconsin have witnessed, at some point bureaucracy goes too far. And in going too far, such forms of bureaucracy harm how the overall economy functions. The spirit of gross bureaucracy increases the risks and costs of entrepreneurs dissuading them from attempting to set up what could be a very lucrative enterprise. It increases the paperwork required to run such an enterprise, it increases the startup capital entrepreneurs require to simply get off the ground, it increases the hoops of fire that not only employers but also employees have to jump through in order to function, it cuts away time and resources that could be used for productive betterment, and it tends to bog down society in non-productive (or at the very worst, counter-productive) sorts of behavior. For instance, if in order to protect say, orange juice or coffee stands, a legislature or city council enacts a regulation and mandates that no cup of lemonade in the region can be sold under $20 and the market price for a cup of lemonade is $1, then this effectively seems to eliminate the market for lemonade; people want lemonade and are willing to pay, and given the regulation, everyone loses. But the true market for lemonade is not eliminated; it simply changes. Those who continue to sell lemonade at prices under $20 do so at their own peril on the black market. People who purchase these cups of lemonade on the black market pay a higher price given the increased risk of the entrepreneurs' getting busted, and many people continue to go thirsty. Though orange juice and coffee stands may be pleased with this situation, their enjoyment comes at the price of productivity and the greater common welfare. Those small bureaucratic seeds that are sown in an economic garden if left to grow and fester may end up choking off the rest of the healthy plants in the garden, thereby ruining any hope for a bountiful harvest. If the US economy is to recover, then it will be owing to the productive spirit of employers, workers, and entrepreneurs of all ages. Of course, there must some sort of cost-benefit analysis associated with any necessary government or agency action with respect to bureaucracy. In the case of lemonade stands, perhaps cities and hamlets do have an interest in preventing people from selling harmful or distasteful substances as lemonade, but that is ultimately an issue that can be better addressed in a courthouse on an ad hoc basis, not a legislature or a city council. Yes, society may have an interest in preventing a pedophile from practicing as a pediatrician, and yes, this can be addressed through bureaucratic means, but bureaucracy that has gone too far to the point of absurdity helps no one. How can we tell when bureaucracy has gone too far? When it becomes counter-productive to the healthy functioning of a given society. Or when bureaucratic requirements have amassed to such a degree that they can only be enforced selectively, thereby increasing the appearance of corruption or foul play. Or when the bureaucratic means have lost their purpose or meaning to the point of absurd consequences. As in the case of the children at the lemonade stand in Midway, Georgia, requiring any such permits or licenses is not eliminating, bettering, or even really helping the market for lemonade. If the children continue to operate a lemonade stand, then they may simply increase the cost of lemonade given the criminal risk involved with such an operation. The market remains; it is simply that the children without the necessary licenses or permits are operating on the black market. As economist Faustino Ballve noted, government intervention in the markets (as in the case of bureaucracy) gives way to the "black market", which can be regarded as the "true" market because it is a free market. And ultimately, if we are really working towards a strong, lasting economic recovery in this country, it is a free, productive market that should be encouraged – not gross bureaucracy that hinders the American spirit.