The federal government is coming to kill your small business and you’re not going to see it coming.
After destroying the housing and healthcare markets through excessive regulation that started as a way to “help” those being taken advantage of, the nation’s largest employer is in the government crosshairs as its biggest competition.
According to the U.S. Census Bureau, small business employs 51 percent of the workforce, and as the largest employer it is the biggest competition for a government that has a desire to micromanage how business is conducted in America.
Aside from those “cash only” restaurants and gift shops that have a mysterious way of filing a loss to the I.R.S. every year while somehow managing enough profit to stay around, what the government really doesn’t like is the freedom that small business inspires.
Capitalism means market forces decide how much products cost. Market forces means that government can’t set the price.
And small business has this funny way of undercutting competition using price. Virtually all big business started as a small business that used market forces as a way to get ahead.
And guess how they grew? Loans. The borrowed money from lenders.
This is bad for a government that relies on the financial misery of the masses.
So what’s a government to do?
The Consumer Financial Protection Bureau has come to the rescue with a proposed rule that overregulates businesses that lend money to anyone foolish enough to sign for a loan with a 390 percent interest rate.
The industry calls them “payday” lenders – typically auto loans in exchange for a title, or a short-term loan against future earnings.
“Too many borrowers seeking a short-term cash fix are saddled with loans they cannot afford and sink into long-term debt,” said CFPB’s Director Richard Cordray.
According to CNBC, the CFPM government sponsored solution is for lenders to “conduct an upfront ‘full-payment’ test to determine if borrowers will be able to pay the loan without compromising other financial obligations and without needing to reborrow “
Confused about what that means?
It means the lender is to blame if the borrower can’t repay the loan.
That guy who signed on for the 390 percent interest rate loan? No longer a fool, but a victim.
Besides, the lender should have known that he would default. After all, people can’t actually be expected to take care of themselves and their own finances.
Taking a high interest rate loan option away from a small business disallows that small business to take a risk on growth.
It castrates creativity, kills speculation, and replaces research and development with regulation and stagnation.
With responsibility shifted to lenders there will soon be no one foolish enough (or able) to be a lender. Then government can be the lender.
Once government takes control of lending no risk will be allowed. And in business all growth is risk.
Without growth there will be no small business because there’s no point of having a small business if it never grows.
And without small business there is no capitalism. Just the way government likes it.