Can We Please Stop Squashing Entrepreneurship?

Last summer in Stapleton Colorado three little boys decided to set up a lemonade stand.  Better still, they decided to give all proceeds to a five year old boy in Indonesia using a charity called Compassion International. 

The kids running the stand were ages 6, 4, and 2.  If you think these kids were knocking it out of the park, you’re right.  They decided to combine entrepreneurship, hustle, responsibility, and charity.  All the stuff we preach in the financial independence community. 

So of course someone called the police on them and they got shut down for not having a permit.  According to their Mother, they were “crushed and devastated”.  The four year old started to cry, but they were shut down nonetheless. 

This isn’t the only time justice and peace have been secured in America by shutting down children’s lemonade stands.  It turns out “the war on children’s entrepreneurship” has been going on for a while, as witnessed by stings in other cities that have no doubt protected the general populace from lemonade anarchy. 

If we want more businesses and entrepreneurship in America, it starts with teaching our kids to do it.  And that means not being stupid and wielding the heavy hammer of unnecessary government bureaucracy when some plain common sense would suffice.

Entrepreneurship Is Down

We in the financial independence blogosphere are somewhat in our own echo chamber.  We read each others blogs and interact on the socials with like minded people.  So we might think that everyone is crushing it and starting a business.  Even I, your humble blogger, am starting two LLC’s this year. 

But wait, the real picture is not so good.  According to this Inc article which cites Census Bureau data, entrepreneurship has been in decline for 40 years.  Why?  They cite fear of failure.  I’m sure that’s a factor.  Heck, I didn’t start a business when I was younger for the same reason.  I needed a job and a steady income, I had no safety net. 

But this CNN article which cites the same Census Data adds another reason – Regulation.

Opening a business, even a simple local shop, requires more and more licenses and permits. Consider that almost no new banks have opened since the crisis and Dodd-Frank. Companies have also put more “non-compete” clauses in contracts to forbid current employees from leaving and starting their own firms, at least for a few months or years.

The U.S. already has some of the highest corporate tax rates in the developed world, we shouldn’t be adding more regulation on top of it.  I get it, some regulations are of course necessary and I’m not arguing for a free-for-all business climate.  But we need a balance. 

And shutting down kids lemonade stands clearly shows that we’re often off the rails.

Is Sanity Coming Back In Vogue?

Despite the increasing number of people fruitlessly arguing politics on social media and playing the outrage olympics, sanity might still be alive.  In 2017 Utah passed a law legalizing lemonade stands run by kids.  The fact that a law has to be passed to make this legal is a bit preposterous, but at least they did it. 

And the incident in Colorado made such a stink – as it should have – that some sensible Colorado politicians introduced a bill to legalize children’s lemonade stands.  Just last week it was getting closer to becoming law and had widespread support. 

The mother of the three Colorado children is wisely using the whole debacle as another teaching moment for her kids.  Now they’re learning entrepreneurship and civics.

You Get What You Reward

I’m not claiming that the war on lemonade stands is solely responsible for the decline in entrepreneurship, but it can’t be helping.  In general, when you reward certain behavior from children you get more of it, and vice versa. 

Shutting down lemonade stands when the police could be better put to use ticketing speeding motorists who are endangering people and probably passing right behind them is more than silly, it’s a waste of taxpayer money. 

I’m concerned about the downward trend of entrepreneurship.  But the CNN article mentions hopeful signs such as the Kauffman Index of Startup Activity which has been on an upward trajectory since 2014.   They also note the bulk of Millennials are now entering their 30’s, which is the prime period for entrepreneurship. 

Let’s just hope none of them are carrying the trauma of having their lemonade stand shutdown by overreaching and inane regulations.