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George McGovern’s Real Legacy? Learning the High Cost of Regulation Too Late

On Behalf of | Feb 23, 2015 | Firm News |

As the Texas Legislature ramps up another session, my thoughts turn to hoping the politicians don’t add more burden to business owners trying to make an honest living. I’m reminded of one of my favorite stories of a politician who finally “got it.” I’ll leave to others the debate over McGovern’s place in American history (or his politics in general), but I do think his post-political life is instructive to business owners and the politicians who make the regulations that burden them.

In 1988, Mr. McGovern undertook a business venture that he had desired to run for a long time, owning an inn in Connecticut where he could provide “good food, comfortable rooms, and lively public discussion sessions.” Mr. McGovern didn’t go into the venture as a pure novice, though. As related in the Inc. magazine article cited above, he went into the venture with a friend of his, who had a lifetime of hotel- and restaurant-management experience. Mr. McGovern would put up the capital; his friend would run the inn. As he noted in the Congressional Record, a “politician’s dream” though could be a businessman’s nightmare.

The quaint hotel venture eventually was forced to liquidate in bankruptcy, taking with it not only Mr. McGovern’s hard-earned capital but also 60 jobs (it must have been quite a nice-sized inn). The death came from 1,000 cuts, many of which other business owners know all too well: lawsuits based on the most tenuous of claims, burdensome regulation that cost additional hard-earned capital expenditures, and a tough economic climate. While Mr. McGovern’s inn failed 20 years ago, the lessons he was humble enough to put down in print are instructive still today, in another tough economic environment. “What are the real economic and social gains of the legislation when compared with the costs and competitive handicaps it imposes on businesspeople?” The ongoing costs of regulations such as the Affordable Care Act (Obamacare) are having the same business-crushing impact that Mr. McGovern saw more than two decades ago.

I hope that politicians at all levels and all political persuasions would pause to think hard about the lesson Mr. McGovern described so well above. As Calvin Coolidge once noted, “After all, the chief business of the American people is business. They are profoundly concerned with buying, selling, investing and prospering in the world.”1  Those of us who are business owners and represent business owners trying to navigate the treacherous waters of government over-regulation hope that we can return again to the days when the chief business of Americans is buying, selling, investing, and, most importantly, prospering.

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[1] President Calvin Coolidge’s address to the American Society of Newspaper Editors, Washington D.C., January 25, 1925.