Government Regulation and Jimmy John's

[davideinstein]

Quote from: tulsa_fan on November 16, 2012, 08:26:46 am
Wasn't there a thread once where it was pondered why so many people look but few comment?  WoW, I mean you can disagree with someone's opinion but if I was the JJ guy, I'd be done posting my opinions as well.  Maybe he doesn't have time to sit down and compose a well thought out dissertation on his frustrations with over involvement by the government, maybe he's too busy trying to find ways to grow his organization to go pull statutes and laws to quote.  That doesn't mean I can't see what he is trying to say, over involvement by the government stiffles growth.



Sound bite comments and replies.  It was David that said there were too many government regulations stifling his business.  Well, what I "ask" for is a note detailing which ones he is so obviously concerned about since he appears to have something specific in mind related to the direct operation of HIS stores! 

And then the reply is, well, I don't really have time or can't afford the effort to say which issue is stifling my business??  What an unbelievable cop-out.


Oh...I'm frustrated by government stifling me...
Ok, which piece exactly is stifling you?
I don't have time to talk about it...

??  Plenty of time to post about all the frustrations, but no time to say which ones they are - or even just one?


Well, I will say again - I'm frustrated as can be that I can't get the competent people I need to work for me for $2.50 per hour.  That's stifling my business to the point where I just don't know for sure if we can possibly survive....(insert wringing of hands here)....I guess I can just sell all my equipment, write myself the bonus check, and all those people are just gonna lose their jobs...

There isn't a single regulation that is stifling us. I gave some examples of things that frustrate me earlier in the thread (two hand sinks, food handlers cards, labor tax, etc). I don't know what kind of side rant the latter part of your post means, but that wasn't my point. I just like efficiency.

[TheArtist]

I'm curious on this too. I'm guessing this is more than a gift shop? 

Nope, just a gift shop.  And also, no, the fountain is not by the restrooms.  Wish it could have been but the hallways were not wide enough for that to be ADA compliant.  Couple other interesting things we had to take care of recently were, a "mixing" valve on the restroom sinks so that the water would not get too hot (apparently just turning it down at the water tank won't do it) and a brand new regulation now requiring a vertical grab bar next to each toilet.

Money here, money there, it's a wonder it's so hard to start a business in downtown or in an older building.  Especially if your just an average person, or an artist lol, trying to start a business without taking out a big loan and doing it "out of pocket".  You think with some "sweat equity" hard work and yes, paying attention to some basic, fundamental things you could make a go of it.  Even with our talents and us doing a LOT of things ourselves, it's easily cost over $20,000 to get the space workable, and that is not including props (tables, shelving, etc.) and of course merchandise.  I still have yet to do signage, that will have to wait a bit.  We just did the baaare essentials for lighting and plug-ins for instance and will call in the electrician to add more later.  Will also upgrade the restrooms (add tile for instance) as we can afford that as well.  Then we have easily over $30,000 in merchandise, and it still could have used at least double that to get the space to feel full.  So, by the time we open next week, about $60,000 will have been put out to get this little, meager "start" of a gift shop going.  And even that does NOT include our 4 months of working in that space just about every evening, often till 10 or 11 at night.

But I do have to say I am excited about the future.  Just been a rollercoaster, stressful, hard working, 4 months.   After the holiday rush I can then spend the next year or two working the kinks out, upgrading, being creative, trying out new ideas, etc.  Am excited about the possibilities.  This first step would have been a lot easier though without some of the "expensive to us on a tight budget" regulations and such.

SO,   should open next week!   Please drop by and do some Christmas shopping!  I have a mop sink to pay for lol. 

[JCnOwasso]

I'll give you an example as well, my in laws owned an extremely successful construction business that did mostly government work.  They had done work for Tulsa for years.  In the last couple of years a new requirement was put in for those that bid, you had to utilize Minority Owned subs or you wouldn't be considered to bid.  It didn't matter that he didn't use subs at all, or that his company was full of minorities . . . if he didn't give part of his bid to a minority owned sub, he would not win the bid.  He didn't appreciate the city telling him how to do his work, so guess what?  He liqudated and left others to deal with it.  He was successful enough that he had that option.  But they are spending less money in the economy, as are many of their employees who likely aren't making as much $$ elsewhere. 

I am not a fan of the cities procurement practices, but I actually agree with this one.  The purpose of this is not to stifle business, it is to stimulate Minority owned businesses and encourage entrance into the market of other business.  I am not sure of the amount that the city required, but I am pretty sure it was insignificant in the grand scheme of things.  When I worked for a DoD contractor, we had to utilize a total of 25% small business mixed among several different classifications (woman owned, veteran/disabled vet, disadvantaged small business, etc). 

As for my current federal job, we HAVE to use small business for EVERYTHING under 150k.  No way to get around it (unless there is not 2 or more small businesses that can perform the task or supply the item).  The arguement that you pay more for small business is not even a consideration unless it is a gross overpayment.  The response from DC is that you have to budget for the use of socio-economic programs (small business usage). 

[Red Arrow]

The response from DC is that you have to budget for the use of socio-economic programs (small business usage). 

I guess that's OK as long as folks are willing to buy "$600 hammers".  (Or was it toilet seats?)

[nathanm]

I guess that's OK as long as folks are willing to buy "$600 hammers".  (Or was it toilet seats?)

You mistake accounting shortcuts for actual cost:

One problem: "There never was a $600 hammer," said Steven Kelman, public policy professor at Harvard University's John F. Kennedy School of Government and a former administrator of the Office of Federal Procurement Policy. It was, he said, "an accounting artifact."

The military bought the hammer, Kelman explained, bundled into one bulk purchase of many different spare parts. But when the contractors allocated their engineering expenses among the individual spare parts on the list-a bookkeeping exercise that had no effect on the price the Pentagon paid overall-they simply treated every item the same. So the hammer, originally $15, picked up the same amount of research and development overhead-$420-as each of the highly technical components, recalled retired procurement official LeRoy Haugh. (Later news stories inflated the $435 figure to $600.)

"The hammer got as much overhead as an engine," Kelman continued, despite the fact that the hammer cost much less than $420 to develop, and the engine cost much more-"but nobody ever said, 'What a great deal the government got on the engine!' "

Thus retold, the legend of the $600 hammer becomes a different kind of cautionary tale. It is no longer about simple, obvious waste. The new moral is that numbers, taken as self-explanatory truths by the public and the press, can in fact be the woefully distorted products of a broken accounting system.

http://www.govexec.com/federal-news/1998/12/the-myth-of-the-600-hammer/5271/

Sometimes the government does have to spend seemingly ridiculous amounts of money on things, but I'm sure you understand that reopening a production line to build a relatively small number of needed spare parts 20 years after production ended can be very expensive since those startup costs have to be allocated over a small run of product. It would be nice if Congress would be consistent in its prediction of the expected lifetimes of our various weapon systems, but we're constantly fighting about it, so sometimes we have to spend more money than we'd like when service lifetimes are extended by Congressional fiat.

[Red Arrow]

You mistake accounting shortcuts for actual cost:

You mistake my "$600 hammers" for an actual claim of a hammer that cost $600.  Please note the quote marks.

Sometimes the government does have to spend seemingly ridiculous amounts of money on things, but I'm sure you understand that reopening a production line to build a relatively small number of needed spare parts 20 years after production ended can be very expensive since those startup costs have to be allocated over a small run of product. It would be nice if Congress would be consistent in its prediction of the expected lifetimes of our various weapon systems, but we're constantly fighting about it, so sometimes we have to spend more money than we'd like when service lifetimes are extended by Congressional fiat.

I'm sure you understand that I find the mere thought (you found it necessary to post the thoughts above) that I don't understand the concept that startup, prototype, one-off, and making replacement parts in small quantities is expensive to be insulting.

I was thinking about everyday, off-the-shelf items. 

[nathanm]

I'm sure you understand that I find the mere thought (you found it necessary to post the thoughts above) that I don't understand the concept that startup, prototype, one-off, and making replacement parts in small quantities is expensive to be insulting.

I did say "I'm sure you understand..."

In a public forum, a discussion isn't kept between us chickens. You mentioned a notional $600 hammer, so I felt inclined to explain how those particular examples of supposed government waste which are still in the public consciousness some 20 years after they were first discussed are not in fact good examples of government waste. There is plenty of waste, but it's more often connected with someone committing fraud to receive improper payments than it is pure stupidity.

[Red Arrow]

I did say "I'm sure you understand..."

Your usual attitude toward others here evidently led me to an incorrect conclusion.

In a public forum, a discussion isn't kept between us chickens. You mentioned a notional $600 hammer, so I felt inclined to explain how those particular examples of supposed government waste which are still in the public consciousness some 20 years after they were first discussed are not in fact good examples of government waste. There is plenty of waste, but it's more often connected with someone committing fraud to receive improper payments than it is pure stupidity.

Depending on the size of the company, there can be a significant amount of overhead involved in complying with the Federal Acquisition Requirements (FARs not related to flying).  Although it doesn't show directly in the cost of a purchased item, it does add to the overall cost of doing business.  The process of finding and approving suppliers can significantly add cost to an otherwise relatively inexpensive item.

Just to reiterate my earlier post, I am not saying this is either right or wrong.  I am only saying that it is a part of doing business that people should acknowledge and accept or change.

[heironymouspasparagus]

And none of that even touches the shell game going on between DOD, NASA, NSA, and CIA to get funding for various activities that won't show up as line items like hammers.  $15 for the hammer, $585 for clandestine operations lumped under "hammer" umbrella....

[JCnOwasso]

And none of that even touches the shell game going on between DOD, NASA, NSA, and CIA to get funding for various activities that won't show up as line items like hammers.  $15 for the hammer, $585 for clandestine operations lumped under "hammer" umbrella....

I can pretty much assure you that this type of stuff doesn't happen as much as it used to.  Sure there are things that are covered under that whole "national security" blanket, but the days of handling things like they did in the 70's and 80's are pretty much done.  But if you want examples of things that are joked about in my job, there is the $35 screw that a media outlet found out about.  They went to a hardware store and made a big deal about how they could find the same size for .35... They neglected to mention that these screws were for the wings of an F117 stealth fighter.  There is the $2500 tea kettle that is used on Air Force One, again as was mentioned before it was a 3 off so all the non recurring engineering costs and build-up costs were captured in 3 kettles.  The ones that should be mentioned, but rarely are, are the systems level stuff.  The initial Bradley fighting vehicle was an absolute example of Government f'in something up.  There is a movie about it and is the basis behind a lot of the rules we have today as Contracting Officers.  Combat ships that go 100-200% over budget and are done on a cost plus basis so that the contractor doesn't have a reason to control costs.  The media likes to point out the small mess ups and neglects to focus on the things that really cost the tax payers.  I could buy 3.33Million $600 hammers for a 2Billion dollar overrun on a ship contract.

[heironymouspasparagus]

I can pretty much assure you that this type of stuff doesn't happen as much as it used to.  Sure there are things that are covered under that whole "national security" blanket, but the days of handling things like they did in the 70's and 80's are pretty much done.  But if you want examples of things that are joked about in my job, there is the $35 screw that a media outlet found out about.  They went to a hardware store and made a big deal about how they could find the same size for .35... They neglected to mention that these screws were for the wings of an F117 stealth fighter.  There is the $2500 tea kettle that is used on Air Force One, again as was mentioned before it was a 3 off so all the non recurring engineering costs and build-up costs were captured in 3 kettles.  The ones that should be mentioned, but rarely are, are the systems level stuff.  The initial Bradley fighting vehicle was an absolute example of Government f'in something up.  There is a movie about it and is the basis behind a lot of the rules we have today as Contracting Officers.  Combat ships that go 100-200% over budget and are done on a cost plus basis so that the contractor doesn't have a reason to control costs.  The media likes to point out the small mess ups and neglects to focus on the things that really cost the tax payers.  I could buy 3.33Million $600 hammers for a 2Billion dollar overrun on a ship contract.

It has been about 10 years since I had any government related work - I cannot imagine how they could/would make things any better/different than they used to be, so I wouldn't expect big changes on a decade to decade basis.  The system is too entrenched for big shifts.


One of the big "secrets" about low bid contract procurement with the government that I saw - and heard "joked" about regularly - was how the bid was low to get the work, then the 'add-ons' made the overruns.  Very simplistic example - but valid:  "Oh, you mean you wanted a tire on that wheel...??  That is $ xxx more..."

Standard operating procedure.

[JCnOwasso]

It has been about 10 years since I had any government related work - I cannot imagine how they could/would make things any better/different than they used to be, so I wouldn't expect big changes on a decade to decade basis.  The system is too entrenched for big shifts.

One of the big "secrets" about low bid contract procurement with the government that I saw - and heard "joked" about regularly - was how the bid was low to get the work, then the 'add-ons' made the overruns.  Very simplistic example - but valid:  "Oh, you mean you wanted a tire on that wheel...??  That is $ xxx more..."

Standard operating procedure.

Well, big shifts have been made.  I entered contracting on Oct 3, 2000 and over the past decade +2 there have been tremendous changes.  These changes were implemented late in the Clinton administration, but really didn't hit the road until 2000 and took a while for everyone to fully accept.  Invitation for Bids are pretty much kept to construction contracts, and the "buying in" bids (low bidding expecting to get modifications to bump your price) are no longer the norm... but that does not mean that contractors don't try.  We scrub our specifications very thoroughly to make sure we limit any ambiguities which will then limit changes.  But also keep in mind that most of the changes can easily be made at the operational level (making sure the war fighter has everything they need, or in my case, making sure the power gets from the dam's to the grid), systems level stuff is where the politicing comes into play and is a big reason for the bad name many contracting officers get labeled with. There have been many occasions where contractors have made offers to CO's to try to steer an award.  Sometimes they are successful and sometimes the people involved go to jail for a long time (making big rocks into little rocks).

[Gaspar]

All government regulations hinder economic growth?

I disagree.

I actually agree with you.  Government regulations only hinder SOME economic growth.  Primarily they produce boundaries to entry of a specific market or markets, while at the same time protecting others.  Sure, their intent may be just (i.e. reducing the acceptable amount of rodent droppings tolerated in a can of chocolate sprinkles), but they none the less restrict entry into a market.

If I want to open a business, it will be necessary for me to acquire and maintain a series of licenses.  It will also be necessary for me to purchase appropriate coverages, and pay necessary fees.  Otherwise I will incur fines or simply be barred from operation.  For the first time entrepreneur this represents a barrier to business, and is indeed a financial concern that impacts labor decisions.

Lets say my competition is a multi-million dollar chain with an active lobby.  They see businesses like mine as a competitive threat.  They're process are very different than mine, and far more complex and costly, but my process gives me a competitive advantage.  It is in their best intrest to lobby for regulations that support their process and force others to conform.  They will research, and produce evidence supporting the necessity of such regulation for "the greater good."  Politicians like that.

Large companies enjoy much less impact from regulation, taxation and other unnatural market forces, and many rely on regulatory systems to remain at the top of the heap.  The threat of new government regulation and burden is also the primary cause of economic uncertainty for small businesses. As the CEO of Home Depot said last year, "I couldn't start this business today."  The barriers that continue to grow, also continue to protect companies like Home Depot from new and innovative competitive offerings by limiting entry.

The Ten Commandments contain 297 words. The Bill of Rights is stated in 463 words. Lincoln's Gettysburg Address contains 266 words. A recent federal directive to regulate the price of cabbage contains 26,911 words. – The Atlanta Journal

It took about 150 years, starting with a Bill of Rights that reserved to the states and the people all powers not explicitly delegated to the federal government, to produce a Supreme Court willing to rule that growing corn to feed to your own hogs is interstate commerce and can therefore be regulated by Congress. – David Friedman

He who regulates everything by laws, is more likely to arouse vices than reform them. – Spinoza

The natural effort of every individual to better his own condition is so powerful that it is alone, and without any assistance, capable not only of carrying on the society to wealth and prosperity, but of surmounting 100 impertinent obstructions with which the folly of human laws too often encumbers its operations. – Adam Smith

Simple, clear purpose and principles give rise to complex, intelligent behavior. Complex rules and regulations give rise to simple, stupid behavior. – Dee Hock

[nathanm]

I would think you'd be more upset about the things that are forcing small businesses out of business, namely gigantic subsidies (aka development incentives) they are forced to pay to bring large chain competitors to town.

[Gaspar]

I would think you'd be more upset about the things that are forcing small businesses out of business, namely gigantic subsidies (aka development incentives) they are forced to pay to bring large chain competitors to town.

Why not just equally upset?
They both represent unnatural market forces and therefore accomplish the same ends.

Nice redirect though.