Reason: Operation Compliance: Detroit's War on Small Business

[VIDEO] Reason.tv looks at Detroit's Operation Compliance

Operation Compliance began with the stated goal of shutting down 20 businesses a week. Since its inception, Operation Compliance has resulted in the closure of 383 small businesses, with another 536 in the "process of compliance," according to figures provided to Reason TV by city officials.

But business owners say that Operation Compliance unfairly targets small, struggling businesses in poor areas of town and that the city's maze of regulations is nearly impossible to navigate, with permit fees that are excessive and damaging to businesses running on thin profit margins.

As if this great American city doesn't already have problems!

Reason: Sean Malone's "No Vans Land": How a Small Businessman Beat NYC's Public Transit Union

[VIDEO] Often on this blog, I have shared stories from Reason which is a libertarian magazine that often does stories such as this. The interview with Sean Malone is mostly talking about a project he's doing about an NYC entrepreneur who is taking on the NYC transit authority as his business of moving people with vans have run afoul of NYC transit unions and NY City Council. The entrepreneur himself is Hector Ricketts who is a Jamaican immigrant and ultimately saw a need caused by insufficient transit services to healthcare worked by the NYC transit.

Later in this story it was noted that removal of some regulations when it comes to cosmetology in Mississippi - that is you're testing on cosmetology however you're not tested on hair braiding - caused an increase of jobs as shops opened specifically for hair braiding. The lesson, regulations may be OK in some instances however more regulations may not be very good for business.

Reason.tv: The Glorious Rebirth of Bus Travel & Why the Gov't May Ruin it Again

[VIDEO] Reason takes a look at the bus industry and how government interference helped hasten its decline after the 2nd World War. Today the industry is making a comeback as it appears curbside bus service - especially for intercity travel - is allowing more people to take the bus.

When I attended school in Atlanta, my mode of transit was mainly Greyhound. I can see how curbside service could be attractive as it costs money to maintain stations and terminals. In the meanwhile with such services such as Megabus all you need is a bus, possibly a garage, and then a place for the bus to pick-up or drop-off passengers. Also I forgot about labor, the buses can't drive themselves.

Another thing reason correctly notes, in the years I've taken the bus even before the Morehouse College years Greyhound has changed. They repainted their buses, made changes to their terminals, they've even added amenities to their buses with places to charge mobile devices and free wi-fi. Also it helps that you don't have to go to the terminal to pick up a ticket you can even print it off at home. For the context of this video, Greyhound owns some of the bus services popular in NYC's Chinatown.

I have to think, this video portrays starting a bus transit service as being particularly easy back in the past. Just buy a vehicle and start picking up people and yes I realize it's not entirely that simple as well you have to let people know you're in business to start. All the same this could go for a number of industries.

How did it happen that government comes in and sets all these rules for what they expect businesses to do? How is it for anyone who wants to operate intercity bus services that companies must have a permit? Even then how is it government decides that cracks in the frame of a bus is a huge issue while an organization represented bus companies have acknowledged that these cracks aren't a serious safety issue?

There are a lot of questions to be asked for sure. It makes me want to support the strictest definition of laissez-faire.

FDIC takes over another bank and has a connection with an indicted former Chicago Alderman...

A now defunct bank!

If you follow the business pages of Chicago newspapers, we've been knowing about this for a while. The indicted former Alderman in question is Bill Beavers. He had been indicted last month for tax evasion - mainly he had been using campaign funds as income but failed to report it for taxing purposes. Anyway this bank failure doesn't appear to be related to his indictment however this connection is noted because Beavers had not only been an investor, but a vice chairman as well:

New City Bank, the South Michigan Avenue lender for which indicted Cook County Commissioner William Beavers is vice chairman, was closed today by state banking regulators.

The Federal Deposit Insurance Corp. couldn't find another bank to take on the assets and deposits, and instead will pay back depositors up to the $250,000 limit at which the FDIC insures deposits.

New City had $72.4 million in deposits and $71.2 million in assets as of year-end 2011.

The bank was launched in 2003 by a group of local investors, including Mr. Beavers, a South Side alderman at the time. Mr. Beavers, who was indicted last month on charges of tax evasion, holds a small stake in the bank, which now will be wiped out. He denies any wrongdoing.

It did at least have on notable account:

The FDIC now will take ownership of the bank's assets, including loans to U.S. Rep. Bobby Rush, D-Chicago, who ran into brief trouble with New City a few years ago over non-payment of property taxes on a home on which the bank held a mortgage.

More from the Sun-Times:

The shutdown will cost the FDIC’s insurance fund about $17.4 million, the agency said. As of Dec. 31, New City reported $71.2 million in assets and $72.4 million in deposits. It is the 13th FDIC-insured bank to fail this year nationwide.

The bank’s most recent listing of its officers on its web site omitted any mention of Beavers, who is accused of failing to pay taxes on more than $226,000 in campaign funds he allegedly converted to personal use.

This bank failure even hit the AP wires, the first two sentences of that article:

Regulators have closed a small bank in Chicago, the 13th U.S. bank to fail this year.

By this time last year, 23 had been shuttered.

The Sun-Times noted the last Chicago area bank to fail which was early last month. So far in Illinois according to Marketwatch, New City Bank was the second to fail this year!

Here's the bank's website, there's nothing there other than the fact that the regulators had closed the bank and the FDIC had been named its reciever! Another unusual aspect is that another bank could be found to take it over so it was noted at the Sun-Times that:

The FDIC said it will hold all assets of New City for later distribution and that customers should make loan payments as usual.  

FDIC sues leaders of failed Broadway Bank

2010 US Senate Democratic nominee and former state Treasurer Alexi Giannoulias' family-owned bank still can't stay out of the news. According to Crain's:

Federal bank regulators have sued two brothers of former state Treasurer Alexi Giannoulias in connection with the failure of the family's Broadway Bank in 2010.

Also a defendant in the $104 million lawsuit, filed today in U.S. District Court in Chicago, is well-known Chicago real estate developer Sean Conlon, who served on Broadway's board.

In the complaint, the Federal Deposit Insurance Corp. alleges that Demetris Giannoulias, who was Broadway's president and CEO beginning in 2006, and George Giannoulias, who was chairman of the board, along with other board members ignored regulatory warnings and approved “grossly imprudent” commercial real estate loans that resulted in millions in losses, which ultimately were borne by the FDIC when the bank failed.

The suit doesn't name Alexi Giannoulias as a defendant. Alexi Giannoulias was an officer at Broadway before getting elected Illinois treasurer in 2006.

The litigation long had been anticipated given the spectacular collapse of a bank that for years was the most profitable in the state and was a major political issue during Mr. Giannoulias' run for the Senate seat formerly held by President Barack Obama in 2010.

Hat-tip Newsalert!

Capitol Fax: No, we’re not the worst

Ever since my state passed the tax hike on individual and corporate incomes Rich Miller had published several posts that attempts to keep the income tax hike in perspective.

Look, 21st overall ain’t great, but it gives the lie to the “We’re all gonna die!” rhetoric from those who claim Illinois is the worst state ever. And 2nd in new plant openings is a plus, even though our high population means our per million rate is also around the middle of the pack. Tax competitiveness is still not horrible, even after the January tax hike.

Then responds to a list of items that could make Illinois a better state to do business:

We can make it much eaiser to do business here, no question. But busting unions, killing off the income tax and fighting OSHA and EPA ain’t gonna happen. If that’s the climate you really want, then China or Mexico would probably be your best bets anyway.

The chart above is from siteselection.com

Also some of the items mentioned in Miller's post, well none of it is too unreasonable. He's right it's not likely to happen here. It could be attributed to a lack of appetite to tackle those issues especially politically. Weirder things have happened but that much major changes will take some time!

Call the police! Someone is opening a new business in Chicago!

A case of government inspectors overstepping their bounds when it comes to entrepreneurial and innovative ideas and businesses. If I had a lawyer on retainer and this was MY business I would sue the city for this!

When Flora Lazar—an IJ Clinic client who owns “Flora Confections”—and others applied for a license to run a food service business out of Kitchen Chicago, a rental kitchen, a city representative said he could not give more than one license to operate at one address.  Unwilling to believe that the city would outlaw their meticulously run businesses simply because they shared a mailing address, the kitchen owners and renters proceeded to make their meals.
   
No sooner had they started than all the businesses renting from the kitchen got letters from the city ordering them to stop operating immediately.  Flora contacted the city again seeking a license.  She was told she could not get one.  Speaking to a supervisor, she insisted that he accept her application.   Finally, after Flora’s alderman called the Department of Business Affairs and Consumer Protection and insisted that they review her application, the city sent health inspectors to Kitchen Chicago.
   
The health inspectors did not ask Flora how she prepared the pureed fresh fruit she bought from local farms and stored in the Kitchen Chicago freezer.  They did not ask her whether she operated after the cease-and-desist letter was issued—which she had not.  They did not ask her about her impeccable knowledge of food safety or her culinary training.  They instead opened her bags of fruit, dumped them in a trash can and poured bleach all over them.  Amazingly, a Chicago Tribune reporter was there at the time planning to write a story about how open the city has been to new culinary ideas, and she caught this outrage on video.  Flora got her license the day after the inspection.  Nonetheless, after losing her irreplaceable fruit, she had to pay a fine of $500.
   
When government assumes the power to destroy new businesses, inspectors can be frightening, destructive bullies.  Moreover, when the government codifies lots of rules describing what an acceptable business must look like, it stifles innovation.  Complex laws written to govern a traditional business model—a restaurant with a single operator in a particular space—often outlaw future innovations as an unintended consequence.  Government needs to give entrepreneurship space to grow and bear fruit, rather than poisoning it with senseless rules, red tape and bleach.

The incredulous video is below.

 

Consider me laissez-faire in my economic ideas, although I'm not all at opposed to sensible regulations. At the same time this is an idea a community commercial kitchen idea that should at least have a hearing. Unfortunately no one seemed very apt to let this establishment operate. At that destroying product without asking questions and for no documented reason. For all this woman had to go through to get a fair hearing, this craziness almost seems like a form of payback!

Via Newsalert!

Feds launch 'Gestapo raid' over raw milk

Milk does a body good. Then again what kind of milk? Is it processed milk or raw milk? Well it seems that it has been decided that your milk must be processed and that anyone attempted to sell raw milk will get raided and prosecuted.

I found the WND article via Newsalert though I would like to see if any other mainstream news sours has such an article available. I think I want to focus on the science aspect if you want to follow the legal and regulatory aspects go read the whole thing. Though I think I'll bring up a piece of the defendant's argument:

A rally has been set for tomorrow in front of the magistrate's office in Mt. Holly, Pa., in support of a Mennonite farmer who has brought the wrath of the government on himself for selling raw milk and other products – an act government prosecutors say violates a number of regulations.

That's when the next court hearing is scheduled for Mark Nolt, a Pennsylvania farmer who turned in his state permit to sell raw milk because it didn't allow for the sale of the other products he offered.

"They swooped in ... like a bunch of Vikings, handcuffed me and stole $30,000 worth of my milk, cheese and butter," he told the New York Daily News.

His case is just an example of what the government is trying to do to those who believe – based on medical results – that raw milk is better for them than the processed milk available in most grocery stores, according to Nolt's supporters.

Processed milk, many believe, leads to clogged arteries, strokes and heart attacks.

According to reports published by the Weston A. Price Foundation, results of a study by the Medical Research Council in the United Kingdom revealed only one percent of the subjects in an ongoing lifestyle study of 5,000 men suffered heart attacks – if they drank full-fat milk and ate butter rather than margarine.

"We learned ... that [the] study collected data on 5,000 British men between the ages of 45 and 59 for a period of 10 years. Of those that drank at least a pint of whole milk a day, only one percent suffered heart attacks!" the foundation report said. "Some researchers are already claiming the difference is due to a healthier lifestyle on the part of the milk and butter consumers. Others, however, think that milk and butter may have some yet undiscovered benefits."

Another article in the British medical journal Lancet also noted that children who consumed "farm milk," that is, raw, whole, unprocessed milk, had lower levels of asthma and hay fever.

"Researchers examined the history of allergy, asthma and 'atopic sensitization' or skin problems in 812 children, 319 of whom had grown up with a 'regular exposure to a farming environment' including the consumption of 'farm milk,' that is, raw, whole, unprocessed milk. The remaining group of 493 non-farming children acted as a control. Frequency of asthma was reduced from 11 percent found in the control group to one percent among the farming-exposed children. Similarly, hay fever occurred in only three percent of the farming-exposed children, compared with 13 percent of the controls, and atopic sensitization occurred in 12 percent of the farming group and in 29 percent of the controls," the foundation reported.

Here's the legal defense that the defendent in question is attempting to use:

"Nolt contends that the regulations have not been approved by the legislature and shouldn't apply to him because he is selling directly to consumers, via private contracts that are outside the purview of the state, making a privilege out of a right he believes he has – the right to private contracts," the blogger wrote.

Why should any government regulator determine that raw milk is bad? I can understand that people do get sick from food, unfortunately this action especially since no one has come forward to indicate that they became ill after consuming these products is merely pre-emptive. Sometimes pre-emption isn't the best decision, just look at Iraq.

Still why should a government regulator determine that a business shouldn't sell directly to consumers raw milk? If this is what the customer is looking for and so long as this business is taking care that no one gets sick from his products then what's the problem. It's unfortunate that this man isn't able to serve the people who uses his products.