Entrepreneurship is in Alejandro Flores-Muñoz’s blood.

Back in his birthplace of Guadalajara, Mexico, his mother and other relatives sold whatever they could—hair products, food products—to make ends meet. After Flores-Muñoz’s mom brought him to the U.S. as a child, she got a nine-to-five job but kept her entrepreneurial streak alive. “From me just having to watch her figure out how to make a large batch of cheesecakes and flanes” to observing her develop “her selling points” and participate in pop-up events, Flores-Muñoz says, “that entrepreneurship spirit was instilled in me.”

He was inspired to become an entrepreneur himself in 2012 after receiving Deferred Action for Childhood Arrivals (DACA), a status established by President Barack Obama’s administration that delays deportation for people who were brought to the U.S. without documentation as children. That gave him a way to get a Social Security number and the ability to earn the licenses and certifications he needed to become a full-fledged business owner who employs others. He launched several hustles throughout his 20s before becoming part owner of a food truck in 2018. He now owns a catering company.

“I wanted to pay taxes,” he says. “I wanted to get a business license. I wanted to get all of the things that made a business a business.”

Flores-Muñoz has contributed to his community and local economy for years and has become an outspoken advocate for immigrant entrepreneurs. But since President Donald Trump began his second term and launched his mass deportation operation, those activities have become much riskier. “I have never really feared for my immigration status,” Flores-Muñoz says. “That has changed since January 20, 2025, because now nobody is safe.”

“I’ve had to actually write a letter of what to do if I was to get detained. It’s something that I’ve never had to consider. I’ve had to write down all my business information, my banking information, just have that available if I do ever get detained,” he adds. “I can’t believe that I’ve had to think that way.”

People like Flores-Muñoz—and other immigrants, legally present or not—are an important entrepreneurial force in the United States. They start businesses at a higher rate than native-born Americans, creating jobs and enriching communities in the process. Now they’re getting swept up in Trump’s mass deportation efforts. As entrepreneurial immigrants are detained and deported, it won’t just be newcomers and their families who suffer. The American workers, customers, and communities they support will suffer too.

‘The Worst of the Worst’?

Trump campaigned for his second presidential term on a promise to carry out large-scale deportations of undocumented immigrants. “These are people that aren’t legally in our country. This is an invasion of our country,” he said in an April 2024 interview with Time. Trump stressed that agents would “absolutely start with the criminals that are coming in.” His administration would deport “the worst of the worst,” he pledged.

So far, that doesn’t seem to be true. According to an analysis of Immigration and Customs Enforcement (ICE) records by the Cato Institute, “convicted criminals account for just 29% of the increase in people detained by ICE” between January and June 2025. “By early June,” ICE arrests of immigrants “who had no criminal conviction or pending charge…were approximately 453 per day—a 14-fold increase” compared to early January, the Cato Institute reported. Undocumented individuals, temporary residents, and U.S. citizens alike have been detained.

Several immigrant entrepreneurs have been swept up. Kelly Yu was 19 years old and pregnant when she fled China’s one-child policy and crossed the U.S.-Mexico border into Arizona illegally. Since arriving in 2004, Yu has had no criminal offenses and has repeatedly attempted to secure legal status. She developed ties around Phoenix, eventually opening two sushi restaurants and employing 30 people. After ICE detained Yu in May at a routine immigration meeting, neighbors and state politicians began to rally for her release. “She owns two businesses….She has paid her taxes. She’s been in the system trying to fight to become a citizen for some time,” Lisa Everett, an Arizona Republican district chair, told KTAR. Yu remains in ICE detention.

This summer, ICE detained Paul Dama, the operational manager of the award-winning Boston-area West African restaurant Suya Joint. According to his attorney, Dama had work authorization and a pending asylum case based on his prior kidnapping by Boko Haram. His detention forced his sister to work alone to keep two restaurant locations afloat and support their 20 employees. Dama’s latest brush with immigration enforcement has a happier ending than others: After three months in ICE detention, an immigration judge granted him asylum.

Moises Sotelo-Casas was on his way to work at his vineyard management company when ICE detained him in June. The Oregon resident had lived in the U.S. without authorization since the 1990s and had recently begun the legal immigration process. KGW, the NBC affiliate in Portland, Oregon, noted that it “was not able to find any criminal records related to Sotelo-Casas.” Throughout his immigration detention, Sotelo-Casas “continued to provide remote guidance to his vineyard staff” over the phone, KGW reported. He was deported to Mexico at the end of the summer.

Entrepreneurs with different kinds of immigration statuses have been targeted: Paramjit Singh, a green card holder who owns a chain of gas stations in Indiana and faces deportation; Sergio Cerdio Gomez, a Washington food truck owner who was deported despite a pending immigration application; Roger Huang, a New York restaurant owner who fled political persecution in China and now faces deportation; Emine Emanet, who was arrested at her New Jersey kebab restaurant despite a pending permanent residency application; and many more.

None of these immigrant entrepreneurs has a history of violent criminal conduct, and several of them were pursuing legal immigration pathways before their arrests. They’re embedded in their communities, and their detentions have caused an uproar among their neighbors. It makes little sense to claim that they’re “the worst of the worst”—and it makes little sense for immigration agents to be focusing on them.

“We’re clearly seeing that the people who are being detained are not the criminals that are being talked about. In fact, they are the people who are helping everybody run their businesses, put together lives,” argues Flores-Muñoz. “Hardworking people are being taken away.”

America’s ‘Economic Success Story’

Immigration is an inherently entrepreneurial act. It requires someone to envision a better future and decide to pursue it in spite of the risks. It makes sense that many of the people who choose that path end up starting businesses when they reach their new homes.

Part of that comes down to the need to make a living, but it also reflects their ability to innovate where others haven’t and tap into the American dream. Hamdi Ulukaya, the billionaire founder of yogurt company Chobani, told The Washington Post in 2023 that it was “the magic of the land” that changed his perspective from one of “I would never do business” to seeing a factory in a flyer and saying, “I can buy this and make something.”

Many enterprising immigrants have the same experience. Immigrants are 80 percent more likely to found companies than U.S.-born individuals, says a 2022 paper in American Economic Review: Insights. Immigrants “create more small firms, they create more medium-size firms, [and] they create more large firms,” said Pierre Azoulay, an MIT economist and the study’s co-author. The U.S. is home to more than 3.8 million immigrant entrepreneurs, 1.1 million of whom are undocumented, according to the American Immigration Council (AIC).

“The United States’ economic success story would not exist without immigrant entrepreneurs with a range of backgrounds and skill levels who were willing to launch their business ideas here,” argues the Bipartisan Policy Center (BPC). Drawing on the U.S. Census Bureau’s 2007 and 2012 Survey of Business Owners, the center observes that “immigrants had formed about 25% of new businesses in the United States, with rates surpassing 40% in some states.” They were “also 10% more likely to own their own business than U.S. natives.”

Those businesses provide the products and services that Americans enjoy every day, and they also contribute to the national economy in big ways. “Most immigrant entrepreneurs own the types of businesses that populate Main Street,” noted Laura Collins, director of the George W. Bush Institute–Southern Methodist University Economic Growth Initiative, in 2019. They “start more than a quarter of all ‘main street’ businesses—retail, neighborhood services, and accommodation and food service.” Immigrants have also founded some of the country’s biggest companies: Over a fifth of all Fortune 500 companies were started by immigrants, and about a quarter were founded by the children of immigrants. Those companies employ 15.5 million people globally, according to the AIC.

Immigrant-owned companies—big and small, founded by documented and undocumented individuals—create jobs. “Immigrants own nearly a fifth of all employer companies,” which is “higher than their percentages of the US population or the workforce generally,” noted a May USAFacts analysis of Census data. The MIT study found that, on average, companies founded by immigrants have 1 percent more employees than companies founded by native-born Americans.

Entrepreneurship is often a necessary route for immigrants. Many arrive in the U.S. without the English skills required for certain jobs. Others face “difficulties in finding work that aligns with the skill and knowledge base that [they] developed over years in their home countries,” points out the BPC. It can be burdensome for a newcomer to get his professional and educational credentials recognized in the United States. And if he’s undocumented, there’s another reason to be self-employed: It’s illegal for U.S. employers to knowingly hire undocumented workers who don’t have work authorization.

Immigrants start their own businesses despite facing more barriers to entrepreneurship than native-born Americans. There is no visa category that specifically allows foreigners to immigrate to the U.S. to start a business, “leaving these individuals to try to retrofit other channels in the U.S. immigration system to pursue these aspirations,” notes the BPC.

This is true of everyone from a decent cook who wants to open a restaurant to a well-resourced programmer who wants to launch a tech startup. A 2022 report by the National Foundation for American Policy found that while 55 percent of America’s privately held startups valued at $1 billion or more were started by immigrants, a large share of those founders came to the country as refugees, on family-sponsored visas, or through employment-based visas for other companies. Employment-based pathways largely require that an immigrant secure a job offer from an American employer before coming to the country. But a hopeful immigrant who wants to start a job-creating business in the U.S. has no straightforward way to do so, even if he has a proven track record of successful businesses elsewhere.

On top of all these barriers, immigrant entrepreneurs now have to worry about what might happen if they become entangled in the Trump administration’s mass deportation effort.

The Cost of Crackdowns

Mass deportations—and immigration crackdowns more generally—come at a cost. Beyond their price tag and the civil rights violations they bring, they also create a hostile environment for immigrants who own businesses or might start them in the future. They can drive immigrants into under-the-table work or otherwise persuade them to avoid the visibility that comes with being a business owner. And they can decrease the number of available jobs.

Arizona’s Senate Bill 1070 passed in 2010 and is widely regarded as the harshest anti–illegal immigration measure of its time. From 2008 to 2015, Arizona saw a 2.5 percent decrease in “the total number of jobs available…due to the passage of SB 1070,” New American Economy, an immigration research and advocacy organization, reported at the time. Alabama passed its own strict immigration law, House Bill 56, in 2011. Within a year, the state lost an estimated 70,000 jobs, New American Economy finds.

Since undocumented immigrants often create jobs, the AIC explains, “deporting the estimated 8.1 million undocumented immigrants in the workforce would not automatically create 8.1 million jobs for unemployed Americans.” If anything, it would put some Americans out of work. It would certainly shutter many businesses and disrupt many services they enjoy.

Some localities have considered or adopted policies to encourage immigrant entrepreneurship, including among undocumented immigrants. California has allowed undocumented immigrants to secure business licenses since 2014. In 2022, Colorado lifted its ban on undocumented immigrants obtaining business licenses. Senate Bill S5964, introduced in New York in March 2023, would have allowed undocumented immigrants to access business licenses. The following year, New York weighed a proposal to allow international graduate students to get university-sponsored visas to become entrepreneurs.

At the national level, members of Congress have repeatedly introduced legislation to create a visa category for immigrant entrepreneurs, often targeted at those who are highly educated or experienced or have a history of raising capital. Rep. Zoe Lofgren (D–Calif.) introduced the Let Immigrants Kickstart Employment Act in 2021, “which would create a new category of temporary visas for founders of startups, offering the opportunity for permanent residence if the startup reached certain benchmarks,” per the BPC.

Such measures would do far more to support Americans and the U.S. economy than mass deportations. And many Americans understand this. Flores-Muñoz observes a “community that has come out of this situation,” with U.S. citizens “going to courtrooms, escorting immigrants who are going through their hearings,” and acting as “support groups out there.”

Meanwhile, he’s aiming to “highlight the importance of our contributions to America, whether that be through our entrepreneurship journey, us vending [and] selling things, or the services that we provide in the restaurant industry, in the hospitality industry, and construction industry.” Immigrants, Flores-Muñoz says, are “more than what we’re portrayed to be.”

The post He Started a Business Legally. Now Trump's Mass Deportations Threaten Him and Other Immigrant Entrepreneurs. appeared first on Reason.com.

Inflation is one of the key issues for voters heading to the polls in November. And yet, despite sustained high food costs, Americans are actually eating out more than ever before. The United States Department of Agriculture (USDA) reports that close to 60 percent of American food spending is now outside the home—the highest it has ever been.

Part of the explanation for these trends is the COVID-19-initiated rise of delivery and takeout options, as well as the surging popularity of fast-casual dining. The USDA notes that “the pandemic led to shifts in how consumers bought food away from home, which lasted longer than the policies that initiated them.” 

One of the most noteworthy food-related innovations to come out of the pandemic was the rise of platforms like Shef, which allows Americans to cook meals in their own kitchens and have them delivered directly to nearby customers. Platforms like Shef offer budget-conscious Americans home-cooked meals at the push of a button, often cheaper than traditional restaurants. 

Despite the benefits, Maine regulators are cracking down on home-based culinary entrepreneurs with surprise inspections. 

Rhiannon Deschaine of Kenduskeag, Maine began making and selling meals from her home-based business, Kenduskeag Kitchen, in April 2022—sourcing many ingredients from the family garden or homesteading neighbors. In July 2022, an official from the Maine Department of Health and Human Services dropped by Deschaine’s house to conduct an unannounced inspection. While the inspector didn’t find anything unsanitary or problematic about Deschaine’s food preparation or meals, Deschaine was informed that Kenduskeag Kitchen needed to have a “food establishment license” to operate, which would, in turn, require her to install a full commercial kitchen in her home.

A letter of enforcement followed in October of 2022, and by December 2022, Deschaine shut down Kenduskeag Kitchen in the face of potential fines and enforcement action. Shutting down a business like Kenduskeag Kitchen is especially ironic in Maine, a state that recently passed a Food Sovereignty Act and enshrined a Right to Food in its constitution. 

The Food Sovereignty Act is supposed to ensure that the state government recognizes and defers to local ordinances that govern direct producer-to-consumer food pathways; in fact, the town of Kenduskeag has been supportive of Deschaine’s business. The constitutional Right to Food asserts that individuals have the right to grow, produce, and consume the food of their choice, which again would seem to protect the very activity Deschaine and other home-based cooks are engaged in. 

Deschaine, with the help of the Farm-to-Consumer Legal Defense Fund, is suing the state of Maine over the shutdown. Regardless of how the legal arguments shake out, it is a wild overreach for regulators to demand that home cooks install commercial kitchens to sell food to neighbors. Even predating the pandemic, home cooking businesses have grown in popularity as the so-called cottage food movement has taken hold.

However, as entities like the Institute for Justice (IJ) have tracked, many of these reforms remain limited to shelf-stable products like baked goods, thereby excluding perishable items like meat, vegetables, and many types of home-cooked meals. The problem is hardly relegated to Maine either as many states score even worse in terms of food freedom according to IJ’s scorecard.

Concerns over home cooking leading to more food-borne illnesses or food poisoning on account of potentially improper food preparation methods have thus far been unfounded. To date, there does not appear to be a single publicized complaint that has made its way to mainstream media regarding food poisoning from a meal obtained on platforms like Shef.

As we hit the home stretch of the election, politicians across the country and political spectrum are replete with bad ideas for how to solve our nation’s high food costs. Protecting home kitchens could help Americans stretch their food budgets while supporting local entrepreneurs.

The post Home Kitchens Are Under Attack by Regulators appeared first on Reason.com.

No matter what President Joe Biden and former President Donald Trump promise you, and no matter its past as the untouchable “third rail” of American politics, Social Security will be modified one way or another within the next 10 years. While both candidates are misleading their voters, the party with the most to lose from ignoring Social Security’s troubles is the GOP.

First, some background. It doesn’t matter that some people continue to believe the money for Social Security is in an account with their name on it, or that they trust Biden’s and Trump’s word not to touch the program. If Congress doesn’t do something before Social Security’s Trust Fund expires, benefits will automatically be cut by about 20 percent. When there are no more assets to fill the gap between payroll-tax receipts and the benefits being paid out—and not since 2010 has enough tax been collected to cover Social Security—the program will revert to a pay-as-you-go system.

That’s the law. The Social Security Administration will be allowed to pay only those benefits covered by collected payroll taxes, hence the cut in benefits.

It’s an immutable reality. When Biden and Trump tell you they won’t touch Social Security, they are silently admitting they’ll let their benefits be cut by 20 percent. That’s one way to go. However, other politicians, fearing blowback from a block of furious voters who turn out on Election Day in large numbers, will not want such a cut to happen. So, what else might occur?

If Republicans, for much of their history the self-styled party of fiscal responsibility, fail to advocate for and implement meaningful reform before the Trust Fund dries out—or even if they wait until the last minute—they leave the door wide open for Democrats to address the problem in their preferred manner. Historically, Democrats have favored maintaining or even expanding Social Security. Their solution will likely involve raising taxes and increasing government debt.

Higher taxes could come in various forms, such as increased payroll taxes, higher income taxes, or new taxes targeting wealthier individuals. While this approach might sustain benefits in the short term, it will also very likely slow economic growth by reducing incentives for work, entrepreneurship, and investment.

Another possible scenario is covering Social Security’s shortfalls with yet more government debt. This would mean issuing more government bonds, which the government would eventually need to pay back with interest. Higher national debt levels can lead to higher interest rates, crowding out private investment and potentially fueling inflation. Moreover, the burden of this debt would fall on future taxpayers, exacerbating intergenerational inequity.

Republicans must recognize the urgent need for reforming Social Security, if for no other reason than self-preservation. Reasonable options include gradually raising the minimum retirement age, adjusting benefits to reflect longer life expectancies, and implementing fair means-testing to ensure benefits flow where they’re actually needed. Additionally, encouraging private savings and investment through tax-advantaged accounts can help reduce older Americans’ reliance on government programs.

I get why Republicans feel they have nothing to win by reforming Social Security, even if they are in power. That said, there is one benefit they are overlooking.

The Congressional Budget Office (CBO) is well known for projecting the future path of the ratio of debt to gross domestic product based on current, but not necessarily future, policy. That means its projections can include tax hikes and spending cuts that won’t happen. There is one exception to this rule: when it models the impact of the Social Security Trust Fund drying out. In this case, the CBO assumes general revenues (meaning debt) will be used to pay the Social Security gap, instead of showing the benefit cuts currently scheduled in the law.

This could be used advantageously by Republicans if they are willing to reform Social Security when they regain power. (The same goes for reforming Medicare.) Indeed, the CBO would project that Social Security reform lowers the debt going forward—a long-awaited reduction and potentially huge win that Republicans can use to reclaim the mantle of fiscal responsibility. The evidence, for once, will be easily seen in the numbers.

But failure to act will result in a fiscal scenario where Republicans will be left with little leverage as Democrats push through their preferred “solutions.” The resulting higher taxes and increased debt will have far-reaching unhealthy consequences for the economy and future generations. By contrast, if they reform wisely, Republicans will be rewarded with a lower and immediate debt path. It’s a win-win.

COPYRIGHT 2024 CREATORS.COM

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In the grand circus of politics, where elephants and donkeys alike perform under the big top, there’s one act that never fails to draw a crowd: the venerable “job creation” routine. Putting people back to work, especially those without college degrees and in the manufacturing world, is in the center ring. Unfortunately, when you look behind the smoke, mirrors, and rabbits hidden in hats, you’ll see that promises to rebuild America through industrial policy are just plain old corporate welfare.

Industrial policy has made an amazing comeback. In its name, President Joe Biden’s administration and Congress have authorized between $1.2 and $2.1 trillion in domestic subsidies for preferred manufacturing industries in sectors such as clean energy, advanced manufacturing, construction, transportation, and broadband. The ringmaster and his assistants assure the crowd that they’ll deliver tens of thousands of new, high-paying jobs for workers with no more than high school diplomas. Meanwhile, on the right, industrial policy is being discussed as a way to boost manufacturing employment for men left behind in the Rust Belt.

The job creation argument for showering businesses with billions more in subsidies might surprise those of you are aware of America’s remarkably low unemployment rate. Indeed, given that handful of people will always be between jobs, a 3.9 percent rate signals that very few who want employment can’t find it.

Instead, what’s animating these politicians is the exodus from the labor force of mostly poorly educated males. The reasons for this workforce withdrawal are complex and beyond the usual scapegoats like trade and market forces. But this topic I will save for another column.

Instead, let’s focus on the reality that industrial policy subsidies and tax breaks will flow to companies, often big and rich, for projects they would likely have taken on anyway. That means they probably won’t create net new jobs. Even if these subsidies were to create a manufacturing boom, it probably wouldn’t lead to an employment boom because most manufacturing output today is produced by robots.

And even if the subsidies benefit workers indirectly, the beneficiaries will be largely college educated and in higher-income groups rather than those working assembly lines. The golden era of widespread, good manufacturing jobs that so many politicians are nostalgic about is over. It’s been going away for 70 years.

So, industrial policy won’t create jobs for poorly educated workers, but it will supercharge cronyism. The Cato Institute’s Chris Edwards notes that Biden’s industrial policy is better described as a corporate welfare bonanza. The Inflation Reduction Act, he writes, “handed out $868 billion in energy subsidies, most of it to big corporations, including automakers, utilities, manufacturers, and hydrogen producers. Adam Michel finds that Biden’s energy tax subsidies could top $1.8 trillion.”

The CHIPs and Science Act of 2022 gave $54 billion in subsidies to a who’s who of corporate and Silicon Valley elite. Ditto with the Infrastructure Investment and Jobs Act of 2021, which subsidized railroads, electric utilities, broadband companies, the electric vehicle industry, and others to the tune of $548 billion.

Unfortunately, when the government is in the business of distributing favors, corporations devote less effort to producing and more to seeking those favors. The result is “unproductive entrepreneurship,” where innovators use their skills to extract government privileges instead of putting new, better, and cheaper goods and services on the market.

Finally, contrary to the anti–big business rhetoric blaring from the Biden administration, it has granted a large amount of narrow corporate tax breaks to big companies. In fact, Edwards finds that since being in power, “President Biden has increased annual average corporate tax expenditures 92 percent from $109 billion to $209 billion.” He notes that tax code expenditures “have increased from $0.3 billion a year projected under Trump to $29 billion a year under Biden.”

Despite the grand promises of revitalizing the American workforce and bringing prosperity to forgotten corners of the country, the reality is that industrial policy is typically a conduit carrying corporate welfare, benefiting the already powerful and wealthy as it discourages genuine innovation and market-driven economic opportunities.

As we peer behind the scenes of this circus act, it becomes clearer that sustainable employment and economic prosperity will be generated not by subsidies but by unleashing market forces, which will promote entrepreneurship and innovation. Only by moving away from the spectacle can we hope to address the challenges underlying the American workforce and pave the way for a more prosperous and inclusive future.

COPYRIGHT 2024 CREATORS.COM.

The post Politicians Are Showering Manufacturing Companies With Crony Subsidies for 'Job Creation.' It Won't Work. appeared first on Reason.com.

The box-office hit Wonka is a wild flight of imagination, but within the glamor and fantasy lies a hard truth: The mighty often manipulate government power to shut out competitors, stifling innovation and individual rights. The regulatory barriers manipulated by Willy Wonka’s powerful rivals to stymie entrepreneurs are all too real.

In the film’s opening scene, Wonka arrives in the big city, scrappy but determined to fulfill his dreams of building a thriving candy business. In song, Wonka echoes the feelings of many who come to our own country in search of opportunity: “In this city, anyone can be successful if they’ve talent and work hard—or so they say.”

But Wonka is soon confronted by the mighty chocolate cartel. When Wonka begins selling his magical chocolates in an open plaza right outside the cartel storefronts, the cartel boss calls the police, who order Wonka to stop selling in the plaza because he’s “disrupting the trade of other businesses.”

Wonka faces a Catch-22: He can’t legally sell chocolate without a shop to sell it from, but he can’t mount the capital to lease property unless he can sell chocolate. His friend laments, “You can’t get a shop without selling chocolate, and you can’t sell chocolate without a shop.” He resorts to selling chocolate from a cart and fleeing whenever the cartel calls the police. Wonka wins in the end by exposing the cartel’s corruption.

The bubbly spectacle of Wonka can overshadow its more sober message: that regulatory barriers to economic opportunity crush dreams. The corrupt cartel is an old trope, but we often forget that governments enable such cartels through protectionist regulations. Illegal bribes and sabotage—both of which occur in Wonka—are bad enough. But a more insidious evil arises when corrupt businesses can shut down their competitors and amass power with the government’s aid. The cartel in Wonka does just that—manipulating laws, such as the requirement that chocolatiers operate out of a store, to ruin Wonka’s dream.

Sadly, there are plenty of real-world Willy Wonkas who don’t get a Hollywood ending. Ursula Newell-Davis, for instance, is a New Orleans social worker who dreamed of opening a business that would serve special-needs kids who are home alone while their parents work. Louisiana regulates such “respite services,” requiring that new businesses prove that another respite provider in a certain area is necessary. This requirement has nothing to do with Newell-Davis’ qualifications; it’s just a judgment call made by bureaucrats. Those bureaucrats almost always deny new applications. Newell-Davis, represented by Pacific Legal Foundation, recently petitioned the Supreme Court to vindicate her right to earn a living. The Court turned her down.

And laws just like those in Wonka often waylay unsuspecting entrepreneurs. Just as the chocolate cartel shut down Wonka for “disrupting the trade of other businesses,” laws sometimes allow incumbent businesses to protest a business’ entry into the market. These protest procedures impose unbearable legal costs on entrepreneurs, putting them in the same Catch-22 as Wonka: They need to earn enough money to open their business, but they can’t earn the money because they can’t open their business. This happened to Parker Noland, who had to withdraw his application to start a garbage-hauling business in Montana because large garbage companies protested his application and he couldn’t afford the legal fees to fight them. (Pacific Legal Foundation, where I work, is representing him.)

The food industry that Wonka operated in is also rife with anti-competitive laws. Like Wonka, who couldn’t operate near competitor storefronts, entrepreneur Mark Shirley couldn’t park his Ole Time Smokehouse food truck anywhere within 100 feet of a restaurant’s property line in Farmville, North Carolina, effectively forcing him out of town. The law existed to protect established restaurants, not the public. Thankfully, Farmville repealed its ordinance after Pacific Legal Foundation sued on Mark’s behalf. And Wonka himself couldn’t sell his hover chocolates made from his magical suitcase in Wisconsin, which prohibits the sale of candy not made in a commercial-grade kitchen. For non magical chocolatiers, this law bars thousands of entrepreneurs from earning a living from their home kitchens. 

Such laws have little to do with safety and everything to do with protecting powerful special interests. And since this institutionalized corruption is legal, real-world Willy Wonkas often can’t bring down the bad guys. Thankfully, public interest law firms fight in the courts to strike down laws that burden their clients’ right to earn a living. But that’s an uphill battle, as courts often see the right to earn a living as a second-class right, one that governments can trample if they have a so-called “rational” reason for doing so.

State legislatures have also made strides toward greater economic freedom. A few years ago, Utah passed a “food truck freedom” bill that swept aside protectionist barriers for entrepreneurs like Mark Shirley. Likewise, a number of states have reformed or repealed bans on “home kitchen” businesses. Such reforms, however, often face powerful resistance from industry lobbyists.

Early in the film, Wonka stands in front of an empty storefront dreaming of his future business. A police officer shakes him from his reverie and points to a sign: “No Daydreaming—Penalty $3.” While governments in the real world may not be so direct, they often stifle the dreams of fledgling innovators and entrepreneurs across the country. Willy Wonka’s magical chocolates are just a fantasy. But the right to earn a living shouldn’t be. 

The post Wonka Fights the Candy Cronies appeared first on Reason.com.

George McGovern, the Democratic Party’s 1972 presidential nominee, was a liberal icon. During many years in political office, including as a U.S. senator from South Dakota, McGovern successfully championed loads of regulations, taxes, and mandates in the name of the public good. But as a businessman, he was held back to the point of failure by the same sorts of burdens he had once earnestly promoted to achieve lofty goals.

For today’s most overzealous politicians, McGovern’s story is worth retelling.

In 1988, seven years after leaving the Senate, McGovern took over the lease of the Stratford Inn in Connecticut. For the first time, this former politician experienced what it meant to operate a business while obeying government dictates and shouldering business taxes designed by people with little firsthand experience in the marketplace. In the end, the inn failed, leaving McGovern with many observations about the disconnect between politicians’ dreams and business owners’ realities.

In a 1992 Wall Street Journal op-ed titled “A Politician’s Dream Is a Businessman’s Nightmare,” McGovern recounted how, as a senator, he didn’t realize just how costly regulatory compliance is. He was unaware of how well-intentioned regulations often produce bad outcomes, how taxes dampen investment, and how mandates make it harder to innovate or survive, especially during recessions.

As McGovern wrote, “the concept that most often eludes legislators is: ‘Can we make consumers pay the higher prices for the increased operating costs that accompany public regulation and government reporting requirements with reams of red tape.'” He added: “In short, ‘one-size-fits-all’ rules for business ignore the reality of the marketplace.”

Indeed. A well-functioning marketplace requires rules—institutions such as property rights, an unhindered system of profit and loss, and a fair and stable law of contract. It also requires an abundant level of freedom within the confines of these institutions. Fundamentally, most government interventions into the market tinker with these institutions and hamper that freedom.

One example is requiring that companies provide their employees with child care benefits. Sounds great, but this requirement interferes with the contractual negotiation between employees and employers about what the right mix of wages and benefits should be. Because employers cannot dispense benefits for free, and because every firm and individual is different, mandating higher benefits means mandating lower wages. It’s that simple.

Mandating that companies always use U.S.-made materials in their infrastructure projects is another example. It subjects factories to burdensome permitting processes that raise costs and increase the time required to complete construction plans. At some points, even when companies have the necessary financial and physical capital, the extra costs dissuade them from pursuing their original goals. Other businesses—as McGovern learned the hard way—are brought to their knees by the costs.

Excessive government interferences in the market also get in the way of politicians’ dreams financed through spending. The higher cost of building infrastructure, for example, means that each dollar spent on a new school or clean energy project doesn’t go as far as it otherwise would. Sometimes promised projects don’t even get built.

This government-created inefficiency, unsurprisingly, affects things like the Inflation Reduction Act, a $400 billion statute meant to build green energy. Now, some people are worrying that this plethora of regulations could get in the way of building anything. This worry is justified.

As the Journal reported, government spending is flowing at a time when “new wind installations plunged 77.5% in the third quarter of 2022 versus the same period the year before, according to S&P Global Market Intelligence. New utility-scale solar installations likely fell 40% in 2022 compared with 2021.” The culprits? Overregulation, tariffs meant to ban sourcing from China, and opposition by NIMBYs to building.

The same will be true of any industrial policy objectives that politicians pursue, such as the CHIPS Act with its $52 billion in subsidies to build microchips. Factories will have to be built in an already overregulated environment, and President Joe Biden’s administration just added mandates that subsidy beneficiaries provide child care, buy American, cease stock buybacks, and more.

The administration claims it’s doing this for workers, but it’s not considering ramifications like, for example, how subsidizing companies’ child care centers could exacerbate provider shortages in nearby centers, which, due to state regulations, cannot hire capable workers without college degrees.

Politicians today could learn from McGovern’s epiphany and honesty. An excessive amount of government will only stifle entrepreneurs and prevent long-term policy goals from ever playing out. It will also get in the way of the government itself.

COPYRIGHT 2023 CREATORS.COM.

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Food carts in Portland, Oregon, are under the gun due to new state wastewater disposal rules, Portland Monthly reported this week. The new rules, which debut next week, have forced some of the city’s world-renowned carts to close—temporarily, they hope—while they try to figure out whether and how to comply.

Portland’s beloved food carts are largely stationary vending operations that sell food out of spaces they share with other carts. These spaces, known in Portland as “pods,” often feature a dizzying array of foods that put most any food court to shame regarding the variety and quality of foods they offer. Visitors to a pod might find a schnitzel cart parked next to other cart vendors selling steamed bao buns, pizzas, empanadas, meats on sticks, and crepes.

“Part of the reason why carts are so popular [in Portland]: there’s a low barrier to entry to starting one, with lower upfront costs and less regulation involved than with brick-and-mortar restaurants,” the Monthly details in its excellent piece. “But with new regulations regarding food carts and food cart pods taking effect on January 1, 2023, some cart owners are worried about their ability to keep their businesses open, and some have already made the decision to temporarily close, including Meliora Pasta and Papi Sal’s.”

The new rules made news this fall.

“Starting in January they must be connected to a sewage line or have their wastewater pumped on a regular basis,” KGW8 reported in October. “In 2019, the Oregon Health Authority implemented a new rule that food [] carts and pods can no longer store wastewater. This is an effort to cut down on spills which create health and safety risks.”

When it comes to commercial food wastewater disposal, the general approach—from the EPA to state and local regulations—prohibits businesses from dumping untreated wastewater into municipal sewage drains or other waters. As a result, many food businesses—food carts included—hire companies to dispose of such waste.

Today, the Monthly explains, Portland carts may dispose of wastewater “by connecting directly to the sewer with a grease interceptor, by collecting water in the cart’s small onboard wastewater tank and frequently emptying that tank, or by collecting water in a large wastewater cube adjacent to the tank.” The new rules largely eliminate the latter option and make the second option prohibitively expensive—which is also an inherent and ongoing problem with the first option.

Owners of many food carts, which Portland Monthly rightly calls “the heart” of the city’s food culture, are struggling to figure out how to pay for the new disposal expenses. Existing disposal charges for carts have been around $80 per week, according to KGW8, and often involve carts emptying waste regularly into an on-site wastewater “cube” that can hold hundreds of gallons of wastewater and is emptied weekly. But the new rules, Portland Monthly explains, effectively ban such cubes and only allow carts to store small amounts of wastewater in onboard tanks.

Daily wastewater disposal can cost $70—several times the existing cost KGW8 reported—and that’s if a wastewater hauler that works with food carts can be found and booked. The Monthly reports there are only two very overbooked haulers in the Portland area. Alternately, hooking up a pod to a municipal wastewater line can cost a property owner tens of thousands of dollars—charges the pod owners pass along to their tenant food carts.

“I’ve got a bid for a contractor that’s $30,000, and we’re not gonna do that,” Tess Kies, who owns a food cart pod, tells the Monthly. “I know we won’t keep [the pod] if the cost is outrageous. I’m concerned that [a lot of the carts around the city] are going to be put out of business.”

The new wastewater regulations come at a particularly unwelcome time for Portland’s food carts, which (along with other city eateries) have experienced declining revenues during this year’s holiday season. Many well-liked carts in Portland already closed for good this year—even before the new rules take effect. Another issue with the new rules is that while they’ve been in the works for years, some food cart owners say they only found out about them in August. That’s one reason some owners, the Monthly reports, are asking the city to delay enforcement.

I support keeping city sewers free of untreated commercial cooking grease and other food waste that can overwhelm them. Recall that in 2014, a “fatberg“—a disgusting blob the length of a Boeing 747 made up of used cooking oil (along with other gag-inducing waste)—was removed, over a period of several days, from a London sewer it was clogging.

Surely, though, there must be some other ways to prevent sewer fatbergs and the introduction of untreated wastewater into rivers and streams than forcing food cart owners to pay thousands of dollars in new fees to dispose of their wastewater. Delaying implementation of the new rules, as some are requesting, seems the least the state, county, and city can and should do. But what about, say, increasing penalties for wastewater spills and dumping? And, given Portland’s health department claims wastewater cubes located at pods are sometimes hit by cars—leading to spills—why not require those cubes to be placed in areas no vehicle may access (e.g., by requiring them to be surrounded by inexpensive bollards)? Because the alternative—putting vital small food businesses in Portland’s crisis-ridden downtown out of business—is no solution at all.

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