The Rise and Fall of Entrepreneurialism
I ran across a blog post by Simon Black at the Sovereign Man blog recently, and because it is so timely, I thought I would post it here in its entirety. It discusses the emerging entrepreneurialism in Zimbabwa, as well as some of the effects of over-regulation on entrepreneurs in the U.S.
January 17, 2012
Santiago, ChileOne of the most phenomenal human beings I’ve ever met hails from Harare, Zimbabwe of all places. His name is Time. That’s seriously his name. When you ask him about it, he shrugs, grins, and says, “My mom felt that she was in labor for way too long.”
Time is a real Sovereign Man. He understands that his family comes first and foremost above all else, and growing up under the regime of Robert Mugabe, he had to get very creative in order to support his loved ones.
By the time he was 15-years old, Time could see the writing on the wall. Mugabe had all but destroyed the market and private property rights, and Time knew there would be absolutely no prospects for him in Zimbabwe.
So what did he do? He learned a valuable skill and looked beyond his own borders for the best opportunities. He spent years in the wilderness living with the native bushmen learning how to track animals. He worked diligently to improve his English. He read everything he could get his hands on about botany.
He traveled to Tanzania and Botswana to cut his teeth as a safari guide while Mugabe plunged Zimbabwe into hyperinflation. He worked hard, saved his money, and always sought to improve his professional capabilities to become a better guide.
When the smoke cleared, he returned to Zimbabwe and took a tracker job at one of the most exclusive lodges in southern Africa. I got to know him when I was visiting the lodge last year, and we became fast friends due to our common philosophical outlook.
Time and I talk regularly, and I’ve been helping him to invest in Zimbabwe’s burgeoning agricultural sector. Mugabe’s economic policies absolutely devastated what used to be one of the most fertile places in the world… but now it’s starting to make a comeback. Time is eager to capitalize on the opportunity.
A few months ago, he scrapped his savings together and bought a small piece of land that he wants to begin planting with various small-scale organic crops. I offered to pony up the $3,000 he needs to buy submersible pumps for irrigation.
“Western Union,” he told me, “is the most efficient way to receive cash in Zimbabwe. As you know, because of Mugabe, we don’t have our own currency anymore. But be advised, they’re going to give you a hard time when you tell them that you want to send money to Africa.”
My next call was to Western Union.
“I’d like to send money to Zimbabwe,” I announced to the operator.
“What’s the city and state, sir?”
“Zimbabwe.”
“Is that an international transfer?”
“Yes!”
“What country?”
“Zimbabwe.” I was about to lose it. I heard the familiar click, click of the keyboard as his system pulled up the country-specific rules.
“Uh, sir, we are obliged to discourage you from sending money to people that you don’t know. Did you receive this request to send money from an email?”
“No, it’s cool, I know this guy, we’re friends.”
“Yes, sir. But did you receive this request by email from an unknown person?”
“What did I just say? No. I know the guy personally, quite well. Let’s proceed.”
“Yes, sir. Will you be sending the money in local currency?”
“There is no local currency in Zimbabwe.”
“… sir?”
“Nevermind. Let’s just send US dollars. $3,000 total.”
“Yes sir. Now, US government regulations require that I collect your social security number for any money transfer in the amount of $3,000 or more.”
“What? Seriously? I’m calling you from Chile trying to send money to Zimbabwe. What business is that of the US government??”
“…”
“Look. Let’s just make the total $2,995. OK?”
“Yes, sir.” And then he proceeded to collect all the information about Time, confirm my credit card information, and all the other nonsense. After a few more minutes, he submitted the order for processing, and then told me,
“I’m sorry sir, the transfer has been declined.”
“What? Why? Was the credit card declined? I can call Mastercard.”
“No, sir, it was declined on our end. Our system refused to take the order. US government regulations require…”
Steaming angry, I politely thanked the man for his help, hung up, and sent an email to my banker in Singapore asking if they could send money to Zimbabwe.
“No problem!” she replied. Exactly the answer I was hoping for.
As I write this note, I’m happy to say that the funds are on the way to Time, and that he should be up and running by the middle of next week.
The whole affair was just another friendly reminder of why I try to avoid doing anything in the US at all. Regulations, financial tracking, consumer protection… it’s just too damn difficult to get anything done.
In fact, that I achieved my objective by using a flexible, “can do” bank in Singapore is probably the perfect conclusion to this allegory.
Well, it is great to see that entrepreneurship is coming back to Zimbabwe and that young people there can start their own businesses again. Maybe that could be an example for entrepreneurs in other countries.
On the other hand, it is sad to see how the U.S. is crippling free enterprise with an unbridled lust for more and more regulations.*
According to Senator Collins of Maine, there are over 4,200 new business regulations being prepared in Washington for imminent implementation—a large number of them aimed specifically at small business. That is why she introduced Senate bill S.1539 – Regulatory Time-Out Act of 2011, to slow down the avalanche of new regulations.
Of course we won’t even mention the customer service at Western Union.
Sadly, many people commenting on forums, blogs, and YouTube believe that all these regulations are good and proper—that they keep us safe and healthy. What do you think?
* The annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008. Had every U.S. household paid an equal share of the federal regulatory burden, each would have owed $15,586 in 2008. (SBA Office of Advocacy, September 2010)
*
Small Business–Caught in the Middle
I posted about this subject before, but I thought it would be a good idea to see if anything has changed since then. Apparently it has, but not for the good of small business.
“…community banks have plenty of money to loan, but thanks to increased regulatory scrutiny, all banks–even those that had no part in the subprime mess–are being forced to tighten their lending standards and are therefore narrowing the range of acceptable borrowers.”
–Paul Merski, Chief economist, and Director of federal tax policy for Independent Community Bankers of America“We want to lend, but the regulators are flat-out telling us, ‘Get your capital up.’ Then there’s Congress telling you to, ‘lend it all out.”
–Greg Melvin, Board member of FNBCorp, a PA based bank that received $100 million in federal bailout funds.“The left hand has the banker by the throat, saying ‘We want your ratios adjusted to compensate for diminishing assets,’ while the other hand is saying ‘we need you to start lending.’ They’re coming from different directions.”
–Curtis Cummings, CEO of Alan Jeskey Builders of Las Vegas
Well, as is typical of anything the U.S. government is involved in, the left hand doesn’t know what the right hand is doing–and small business is caught in the middle.
Hundreds (thousands?) of small businesses are closing every day–putting more and more people out of work–because they do not have the financial resources to see them through this recession.
Putting cash in the hands of consumers who are supposed to spend it in businesses that no longer exist doesn’t make much sense.
Small businesses need access to operating capital to keep their business viable until the economy turns around. The banks have the money to loan to deserving businesses, and the willingness to loan it, but the federal government is telling them they cannot loan the money out.
Doesn’t make much sense to me–does it to you?
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