Marc Bold spent 35 years working in hardware before giving it up this summer. He sold his building, liquidated his stock, and closed up T&M True Value on the south side of Milwaukee.
For which the City of Milwaukee hit him with a $510 fee. Don't try telling him we're a society that underregulates business.
Mr. Bold stumbled into something that lurks in quite a few municipal codes. The day after he hung up a banner announcing the sale — he'd carefully obtained a permit for the sign — a city employee walked in and said Mr. Bold needed another permit, one for the sale. Mr. Bold said the man had paperwork: "I said, 'This is a joke.'"
Nope. You need a permit if you hold what Milwaukee ordinances call a "closing out sale." There's an escalating fee depending on how long the sale will run, plus you pay $2 per $1,000 of inventory. You need to give the city a list of what's for sale and, within two days of the end of each week, a "statement under oath" as to how much you sold.
"I was livid," Mr. Bold said, that the city unexpectedly took a slice from his sinking enterprise. "It reminded me of the old Mafia movies, the guy reaching into the register, saying, 'This is my take.'"
This isn't just a quirk of Milwaukee. Other cities require a similar permit of the dying. Boston does. Albany does. Texas and Florida do, statewide. New York City most certainly does, requiring you to bring to the Department of Consumer Affairs, in person at 42 Broadway, a permit, an inventory, and $50.
This wasn't on the radar of various taxpayer groups and overregulation watchdogs I checked with, any more than it was on Mr. Bold's. Either they hadn't heard of such requirements or they had the impression they weren't often used. "It seems a little archaic," a spokesman for the National Federation of Independent Business in Wisconsin, Bill Smith, said.
It's not as if such permits are moneymakers. Most places, businesses play a flat, nominal fee. Milwaukee sold just two permits last year. New York sold 81 such 30-day permits and 64 renewals for sales running longer, a spokeswoman of the Department of Consumer Affairs said. That totals less than $7,300 revenue. It's not about the money.
It is, instead, about regulatory inertia: It's the fossilized waterline from a previous up-slosh in rules. Many places imposed such rules during the Great Depression. Milwaukee's 1932 law resulted from businessmen demanding action against "demoralizing competition," as one news account put it. New York's, from early 1937, was in reaction to what a prosecutor called the "window larceny" of false distress. There are periodic crackdowns when enough people are annoyed by midtown stores advertising their own doom.
Yet these fossils still bite, even in an era in which business supposedly is underregulated. We are told that a nation of underwater mortgage borrowers is weary of unfettered commerce. What is more, leading congressmen have gone beyond the debatable proposition that rules must be tweaked for changing conditions. Rep. Barney Frank, a Democrat of Massachusetts who heads the House Financial Services Committee, has been gleefully saying for months that it's time for a new era of regulation generally.
This notion relies on a general sense that regulations have been slaughtered indiscriminately — Mr. Frank talks of a "30-year experiment with radical economic deregulation."
This isn't consistent even with the narrow circumstance of the home lending crisis. Arguably, that was spurred as much by the unintended consequences of regulation — banks meeting their anti-redlining obligations by lending to ever-shakier borrowers, or borrowers made desperate as home prices were forced up by land-use restrictions — as it was by factors unrelated to regulation, such as an easy-money Fed.
The reality is that regulation grows ever and shrinks rarely. Think simply of Sarbanes-Oxley. The Code of Federal Regulations is 4,500 pages longer than when President Bush took office. New federal rules have added $28 billion in business costs since 2001, according to estimates from federal agencies.
Not that a city's gratuitous slap at a store proves anything, but that such regulations linger is one bit of evidence that regulatory deadwood remains largely uncleared.
And it serves what purpose, exactly? Suppose cities overcame inertia and dumped this little sayonara tax. What evils would be unleashed on the public?
Well, customers could be bamboozled by someone saying his low, low, low prices resulted from his losing the lease, as if anyone cared why the prices were low, as long as they were agreeable. Is anyone going to be buffaloed into falsely thinking a stereo is cheap when pervasive big-box discounters have made going prices instantly transparent? Regardless of a merchant's real motives, said Mr. Smith of the NFIB, "what difference does it make if you still get the 80% off?"
"I think the government should give consumers a little more credit," he said.
But no, we leave the regulations operating, nailing the occasional hardware store. Our political culture has no stomach for systematic culls of old rules.
So we're left with legal folderol from a time when people lost faith in markets and placed their trust, instead, in planning and well-meaning experts. The country's been through at least three cycles of disillusionment about that, and yet small businessmen still get a $510 screwing when they go out of business. That isn't a sign of encrusted regulation having been sufficiently scraped off.
Mr. McIlheran is a contributing editor of The New York Sun.