by Rick Lowe
On Second Thought was a weekly column this blogger wrote for The Bahama Journal from July 7, 1998 through September 7, 1999. Some of them might be dated by now, but I republish them here for what they are worth.
On Second Thought! – February 23, 1999.
Opening Up Shop. Opening Up “Stress”!
The process to establish a business in our town is cumbersome, to say the least. Not only for the businessperson, but for all the government agencies and the attendant utilities.
Let’s examine what happens:
1. A businessperson decides to open a business, say a restaurant, The location is picked, the land purchased and then the requisite building permit is applied for. The permit is granted after 90 days (or longer) while it is ferried from one government department to the next within the Ministry of Works. I think there are actually four different departments that must review the plans.
2. The building is now nearing completion and the applications for water, sewerage, electricity and telephones are now set in motion. Here again, there are several departments within each corporation that must review the application and send people out to visit the site for an inspection.
3. It’s now six months into the project and all the various government agencies and departments are satisfied that all the aspects of the law have been met. Now comes the big day to apply for the shop & liquor licences. So another 60 days pass and the approval process is scheduled for 10:00 AM tomorrow.
As usual it’s a busy day at the licensing board and the application comes up for discussion at 2:30 PM. The only problem is the licence is denied pending further review because the restaurant owner around the corner has lodged a complaint that the new diner will cause him to lose business.
Bear in mind now that the myriads of governmental agencies have approved this business from eight months ago. Now that the building and all the furniture and fixtures are in place, and all the staff have been hired, Mr. Investor cannot open the doors of his $350,000 restaurant.
Let’s Stop Licensing All Together
Sorry to repeat myself, but at each step along the way to completion the venture was approved, but the week before income is about to be generated and sixty new jobs are created, all hopes are dashed because our system is ass backwards! Or did I miss something?
I realise that a licence may be denied because fronting may be suspected or numerous other reasons, but if the business licence was the first permit applied for, tremendous waste of resources of time and money would not be necessary. Why don’t we make the process more friendly by abandoning it altogether? Projects should get off the ground sooner creating more employment and more opportunity. This will also prevent the bureaucratic piracy that is reported from time to time.
Most Bahamians seem to believe that we should have to seek permission to open a business, and I can concede that certain standards should be maintained, but the important thing is that the consumer should be given the ultimate consideration.
Let’s Use Registration Rather Than Licensing
The eminent scholar Milton Friedman describes three different levels of government control:- Registration, Certification and Licensing. To paraphrase Dr. Friedman:
A. Registration requires individuals to list their names in some form of an official register, for a fee of course. There is no provision here to deny anyone the right to engage in an activity so long as his name is listed. Registration is also useful for things such as crime prevention and solution and of course taxation.
B. Certification is a little more difficult to justify because private enterprise can do this for itself, through agencies like Consumer Reports, Better Business Bureau’s, Good Housekeeping and Automotive Service Excellence etc. While an individual may have the experience and ability to complete a certain task, he can be denied the opportunity to perform this task by government regulation. It is interesting that we tend to believe government should certify us on the one hand yet technical schools, colleges and universities certify the quality of their graduates themselves.
C. Licensing, (I have grown to agree), is extremely difficult to justify because it goes furthest in the direction of trampling upon the rights of individuals to enter into voluntary contracts. Licensing tends to use political means to control entry and prevent “non-members” from competing within their market.
The undesirable aspects of “permits” are:
1. Those with permits have control over entry by others into their occupation – leading to a monopoly situation.
2. Trust is placed in government for protection and the individual is less reliant on his own judgement or ability to make good decisions. One can cite numerous cases of licensing not protecting against poor quality of goods and or services.
The Shop Licence Is Granted
Another month passes and the licensing board schedules another meeting to hear the businessperson’s application. This time there is no foundation or reasons for supporting the objection, so the entrepreneur can go about the business of getting the necessary health certificates for a food service industry.
After thirty more days awaiting the health certificates the restaurant is ready to open.
Permits a Detriment to Economic Growth
I am sure many ventures are postponed for inordinate amounts of time, or cancelled completely because of frustration with the licensing process. If we can somehow coordinate a sensible policy of tax incentives for new businesses in conjunction with not having to endure the bureaucratic permit process we just might realise sustained economic growth for a few years rather than the fits and starts we have experienced in the past.
The intricate devise of screening entrepreneurs, known as our permit process should be changed into a direct tax or fee…a revenue device rather than a regulatory body. Why can’t we allow anyone to start a business with very few restrictions. Maybe a natural extension of local government might be that each constituency use real estate zoning to determine the types of businesses in each area. The important point here is that the alleged graft system now implemented by certain people in the ministries, agencies and utilities and the “monopolies” created would come to an end. The real winners would be those people that would soon have their choice of jobs, a wider selection of goods and services, and all (most probably) at better prices for the consumer.
Finally, we have to stop being so dependent on our Government. Can’t we think for ourselves or trust our own judgement? Must we continue to lay at the gallery of the House of Assembly for all that we do? Throughout the world there is a trend toward less government. All the while our Government becomes more insidious.
By the way, the restaurant owner just served the first meal after months of applying for permits.
