Regulation and the Death of the Small

Small businesses are drowning under an intolerable burden

Photo by Victor Ajayi on Unsplash

I despise fire door signs. This may seem a rather peculiar disposition (and to caveat, I appreciate their functionality in times of emergency), but in my opinion, it is a perfectly rational reaction — especially to those who value aesthetics. For some absurd reason, these blue circles with white exclamation marks¹ — devoid of even the faintest hint of beauty — seem to have a habit of popping up in the most aesthetically infuriating of places. Case in point: I once saw a picture of a huge and beautiful old wooden door, probably in excess of five hundred years old, with a large “fire door” sign stuck slap-bang in the middle of it. Ridiculous! The door was prominent enough for everyone to realise that it would serve as an exit in the case of a fire², but Health and Safety decided to desecrate the Ancient with the epitome of modern aesthetic sterility. Welcome to the age of safety, I suppose. Or perhaps, welcome to the age of over-enthusiastic regulation.

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It is safe to say that regulation is a ubiquitous feature of this modern, hyper risk-adverse world. Everything it seems is the subject of regulation: the constitution of car exhaust, sugar levels in food, disturbance of bats and Great Crested Newts, and the maximum allowance of sewage in our rivers,³ all this and more is regulated by some arm of the state — even the correct shape of cucumbers used to be regulated⁴. Undoubtedly, some regulations have caused much good. The Great Smog’s of the 50s in London were by no means conducive to respiratory health, and it is laudable that most factory workers in this country, who work tirelessly to keep the cogs of economic growth turning, no longer have to worry about being killed by dangerous machinery (instead they only have to worry about being fired for not being efficient enough). Closer to my home, recently introduced regulation has improved my living standards. I am a great advocate of the 20mph speed limit in pedestrian areas making our roads more humane — suited to human life, not human death. Even more so, someone who was almost hospitalised because of severe Obsessive Compulsive Disorder 10 years ago (such as myself⁵) should be celebrating the exponential growth of safety-inducing regulation. Yet, despite all this worthy good, I lament the sterile and somewhat boring world I have inherited.

What grieves me most, beyond the loss of aesthetic purity (though that is a great loss), is how time and time again regulation serves to kill off the good, the local, and the small in favour of the big, the bad, and the ugly. The abundance of regulation in the modern era has led to the phenomenon of ‘overregulation’, which has crippled and constrained many a small or traditional business with burdens their limited manpower and empty bank balances simply cannot handle. In this scenario, regulation serves as a ‘public bad’ rather than a public good. And this is a travesty.

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Wendell Berry, the eloquent defender of the small and the good, rails against this very phenomenon in his essay ‘Sanitation and the Small Farm’. “The greatest destroyer of the economies of small farms”, he says, apart from big businesses and “the fashions of leisure and affluence”, is “the doctrine of sanitation”. By this he does not mean that cleanliness is an evil (it is most certainly not), but that sanitation laws and regulations have mandated an almost impossible standard of sanitised perfection, requiring expensive technology and machinery to be invested in and complicated and burdensome sanitation techniques to be employed. These are not simple nor easy changes. The costs of licensing and upgrading equipment can be immense — in the region of hundreds of thousands of pounds — nigh on impossible for small businesses who operate on tight margins to find⁶. Berry, almost as a cry of desperation, asks “[surely it is] possible to be inexpensively healthy and clean?” — the answer coming from the emotionless hygiene inspectors seems to be a curt and uncompromising “No.”.

The businesses that bear the most severe brunt of new regulations are those dealing with animal products. Berry notes that many small dairies close to his home have shut up shop, and in the UK, many local abattoirs have been forced to invest in expensive equipment or face closure⁷. All this in the name of safety and the “common good”. But as Berry rightly questions, does the closure of the small and supposedly “dirty” businesses (who have operated safely without complaint for decades) really increase societal safety? Are the big businesses with their complicated supply chains (and a track record of product recalls) really to be trusted? Or “does it make easier and more lucrative the possibility of collusion between irresponsible producers and corrupt inspectors?”⁸. One does wonder…

If small abattoirs, butchers, and dairies go under, the entire local economies built around these small and local supply chains are potentially eliminated. Suddenly, it becomes uneconomical for smallholders and small farms to slaughter their livestock for local markets, and perhaps, even their own consumption. The nearest slaughterhouse may be hundreds of miles away and are anyway unlikely to want to deal with small farms who want to slaughter one or two animals at a time. Sustainable mixed-farming systems therefore collapse, and with them go the diverse ecosystems that proliferate on mixed farms as well as the closed-loop soil fertility cycles. Adding to tragedy, these small farms often hold significant populations of rare and well-adapted livestock breeds. When it becomes uneconomical to keep these animals, they become not only rare but threatened breeds. The knock-on effects of mixed farm collapse reverberate to the local community whose supply of quality local protein is cut off, and who now have to turn to the supermarket with their less diverse (and often questionable welfare standard) range of meats. All this chaos and tragedy for the sake of unnecessary regulation⁹. It is a heavy price to pay.

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In previous times, small abattoirs, butchers, and dairies were regulated not by regulations (beyond what was necessary) but by their reputation — a reputation which was sacrosanct. Any hygiene misdemeanour or a propensity to cut corners would have been readily perceived by the locals. If local people are good at one thing, is it spreading news. The offending business would have thus quickly found itself at the heart of a heated controversy. It would be shunned — and would be for many years to come. That is, until trust — a trust that can only arise from years of faithful service — was regained. In such an environment, maintaining lofty standards is of upmost importance.

Of course, not all risks can be guarded against despite the best efforts of risk assessments. The ‘unknown unknowns’ always have their fateful day. Additionally, one can always take additional safety precautions — making use of the latest (expensive) technology etc. But there comes a point where it would be counterintuitive to mitigate further risk. The elimination of all risk is not possible — and therefore not desirable. There is a reason why we don’t all walk around in helmets despite that being the safest thing to do. The chances of being hit by a falling object are minuscule, while the risk of looking ridiculous is certain. Some risks (especially those which are almost certainly never going to occur) are worth taking. The trouble is, the state does not trust small businesses with proven reputations to regulate their own risks, and thus burdens them with crippling and unnecessary regulation to mitigate to impossible proportions what they were already adequately dealing with. What is left is a landscape populated with shuttered up shops, rusting abattoir equipment, and a rural economy in tatters.

The death of the small and the good.

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The cynic could infer some devious intent behind all this. Small businesses serve first and foremost the needs of the local community — not the national nor the global. They are of lesser value to governments who desire to act and impress on the global stage with large trade deals and galas with Forbes list CEOs. Small businesses, with their local orientation and archaic traditions are less productive in absolute terms and cannot benefit from economies of scale. Their individual contribution to coveted GDP statistics — the darling of economists and politicians alike — is microscopic. Coupled with the fact that a plethora of small and traditional businesses are less ‘visible’ in terms of taxation, small businesses are ripe for the cull (or at the very least, a lack of state support).

Larger businesses¹⁰ on the other hand are the economic teacher’s pet — easier for governments to influence, manage, and tax, plus they are more likely and able to cooperate with the government in return for favourable business conditions and rates. Governments favour conformity¹¹ — a word which is antithetical to the multitude of unique and diverse small businesses. They will then be left exposed when the economic storms hit and left out of the room when regulations are designed and decided on. The big can afford the lobbyists in the halls of power, the small can only raise their puny petitions — dismissed with a wave of the hand.

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In today’s fraught and volatile economic climate, it is not just regulation that is crippling small businesses. A perfect hurricane has made a direct hit. Small businesses have been pummelled by the twin storms named ‘Rising Inflation’ and ‘Expensive Energy’. These Category Five economic disasters have sunk many small businesses (already weakened by regulation) who served their communities for generations. The aftermath has been just as severe — with disposable incomes down across the board fewer consumers are able to afford the premium prices that small businesses require for products of higher quality, expensive production, and ethical standards.

The big monopolies, especially “The Dreaded Company Named After a Rainforest”¹² must be rubbing their hands with glee over the increased customers they will receive from the plethora of collapsed small businesses — drowning under the weight of burdensome overregulation and the tidal surge of inflation. One only has to look at how they treat the small businesses and sellers they are in (unequal) “partnership” with to see their contempt for the small¹³. For the biggest of businesses, more regulation and economic turmoil may actually benefit them — if the small cannot afford to make the necessary adaptations they will die, whilst the monopolies suck up the customer base and can either ignore the regulation, treating the fines as business expenses or make the necessary changes using their immense capacity for cash injections.

Although the tide of inflation seems thankfully to be receding, the economic forecast is indicating that the coming months and years will still be tough for us all. But they will be especially tough for small businesses. If you can afford to, commit to buying from your local small businesses and ethical producers. It is a form of giving and may help to ensure the survival of these cherished businesses through the torrid months and years ahead. Losing them should not an option, for if we do, we will lose local distinctions, local produce, and local traditions. In short, we lose a fundamental part of what brings joy into life. And the businesses which remain will be those who are answerable to only distant shareholders rather than our local communities.

I know who I would rather have serving my home.

1. This is the case for my fellow British readers.

2. I am being deliberately provocative here. I am aware the door could be locked and thus it is necessary to alert that this door is unlocked if a fire happens. But I plead there must be some other way of signalling this than putting ugly warning signs everywhere.

3. Yes, British rivers are in an absolute mess.

4. https://www.theguardian.com/lifeandstyle/wordofmouth/2008/nov/12/eu-food-veg-cucumber

5. Scrupulosity for those who want to know more (or reach out and talk - my door is always open as they say to fellow sufferers).

6. Carmel Richardson, Cowing Family Farms, The American Conservative

7. https://nationalcraftbutchers.co.uk/as-yet-another-small-abattoir-closes-is-time-running-out-for-locally-produced-meat/

8. Wendell Berry, Sanitation and the Small Farm.

9. https://nationalcraftbutchers.co.uk/as-yet-another-small-abattoir-closes-is-time-running-out-for-locally-produced-meat/

10. Apart from those whose monopoly and scale has grown too big as to be more powerful than most states - Microsoft, Apple, Google et al.

11. Carmel Richardson, Cowing Family Farms, The American Conservative

12. You know what I mean. The Amazon is a river and a rainforest first and foremost. Not a mega-company.

13. https://ilsr.org/fact-sheet-how-breaking-up-amazon-can-empower-small-business/