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It's interesting how some of the biggest defenders of capitalism ironically are academics,.. Friedman, Sowell the Chicago School. It's one things where why not practice what they preach. In reality, a cushy academic job writing books and giving lectures beats the high failure rate and uncertainty of small business. Same for office jobs. The actual capitalism that involves people putting their money on the line is much risker and it's understandable why so many people take the easier path. The failure rate is too high and too hard to get funding. The problem is not regulation as often blamed but rather getting the customers and capital and dealing wit everything else that can suddenly go wrong. Regulation and taxes factors low on this yet it's always the part that gets the most attention.
It varies from state to state, but what I've read from business owners is that taxes factor low but compliance with vague and shifting regulations can be a disaster:
"As a business owner in California, I am going to have to do a ton of research to figure out just how we can comply with all this, and even then I will likely be wrong because whether one is in compliance or not is never actually clear until it is tested in court. I had to do the same thing with California meal break law (multiple times), California heat stress law, new California harassment rules, California sick leave rules, the California minimum wage, Obamacare rules, Obamacare reporting, the new upcoming DOL rules on salaried employees, etc.
Five or ten years ago, I spent most of my free time thinking about improving and growing the business. Now, all my mental bandwidth is consumed by regulatory compliance. I have not added a new business operation for years, but instead have spent most of my time exiting businesses in California. Perhaps more important is what I am doing with my managers. My managers are not Harvard MBAs, they are front-line blue collar folks who have been promoted to manager because they have proven themselves adept at our service process. There are only a finite number of things I can teach them and new initiatives I can give them in a year. And instead of using this limited bandwidth to teach some of the vital productivity enhancement tools we should be adopting, I spend all my training time on compliance management issues."
To be fair, this might be partly selection bias; the business owners who stay in business long enough to write a lot about it are the ones who already survived dealing with capital and customers and emergencies and all.
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