Regulations are Strangling Greec
By Don C. Brunell
Last year, Fotis I. Antonopoulos, a successful Web designer in Athens, decided to set up his own e-business to sell olive oil products. It took him 10 months, winding his way through the city collecting dozens of forms and stamps of approval, including proof that he was up- to-date on his pension contributions, before he could get started.
But, according to The New York Times, even that was not enough. In perhaps the strangest twist of all, his board members were required by the Health Department to submit lung X-rays and stool samples, since his was a food company.
Greece is Europe’s poster child for debt, with experts predicting default even after massive bailouts. Knowing that, wouldn’t you think the government would welcome entrepreneurs like Antonopoulos and reduce its cumbersome regulations to help small start-up businesses?
Antonopoulos’ venture into e-business ran into trouble almost from the start.
Finding prize-winning olive oil was not hard, nor was it difficult to convince farmers that they needed to find prettier bottles. But getting a small warehouse in Athens was a nightmare. No warehouses are allowed in the city. Instead, he had to settle on a storefront and cover up the windows.
The worst moment came when inspectors from two different agencies came to his shop and disagreed about the legality of a circular staircase. The Times reported they walked out, telling him that he “would have to figure it out.”
Start-ups in Greece face mountains of red tape, complex administrative and tax systems and procedural roadblocks. Last year, at least 68,000 small and medium-size businesses closed in Greece, eliminating nearly 135,000 jobs.
But despite the government’s repeated promises to improve things, the climate for doing business there remains abysmal. In a recent report, “Greece 10 Years Ahead,” McKinsey & Company describes Greece’s economy as “chronically suffering from unfavorable conditions for business.”
The Greek government doesn’t seem to get it.
Greece exports 60 percent of its olive oil in bulk to Italy, where it’s refined into higher-value finished products that command a 50 percent price premium. In marketing olive oils, olive wood and olive-based cosmetics, Antonopoulos is trying to sell value-added products that could greatly benefit Greece’s economy.
But the Greek bureaucracy isn’t helping. And it’s not just the Greek government — it’s also the banks.
Before the banks would agree to act as clearinghouses for credit cards for Antonopoulos’ Olive Shop website, they insisted that portions of the site — including the company’s marketing and privacy policies — be written exclusively in Greek.
Antonopoulos tried to explain that his foreign customers would not understand Greek. In the end, he turned to PayPal and had what he needed to get started in less than 10 minutes.
The U.S. Food and Drug Administration approved his application to export his products to America in 24 hours — and FDA approved it online, a practice that is apparently foreign to the Greeks.
The red tape in the U.S. isn’t as bad as Greece — but it is bad. In America, the costs of regulations are staggering, clobbering our small businesses and entrepreneurs. Our Small Business Administration’s Office of Advocacy estimates it costs employers $1.75 trillion to comply with federal regulations. The compliance cost is 36 percent higher for small businesses: $10,600 per employee.
And it’s getting worse. Each year, U.S. federal agencies issue approximately 4,000 new regulations, and the annual cost to taxpayers to develop and enforce those regulations is expected to approach $50 billion this year.
We’re not as bad as Greece — yet. But we’re getting closer.
About the Author
Don Brunell is the president of the Association of Washington Business. Formed in 1904, the Association of Washington Business is Washington’s oldest and largest statewide business association, and includes more than 7,800 members representing 700,000 employees. AWB serves as both the state’s chamber of commerce and the manufacturing and technology association. While its membership includes major employers like Boeing, Microsoft and Weyerhaeuser, 90 percent of AWB members employ fewer than 100 people. More than half of AWB’s members employ fewer than 10. For more about AWB, visit www.awb.org.