Regulations Beyond a Joke

This rainy summer bureaucrats’ overwhelming urge to regulate brought forth “Rules of Mushroom Gathering in the Forests of Lithuania.” One of the decree’s clauses stipulates that “mushrooms must be uprooted or cut down at the base of the stalk.” Another clause prohibits “crushing mushrooms which are not picked” (the reference must be to death-caps) and requires adherence to “The Law on Forests, Forest-Fire Prevention Rules and other effective laws of the Republic of Lithuania.”
Pursuant to the said decree, adopted by the Ministry of Environmental Protection, officials have a right to check the baskets of mushroom-pickers and to take for inspection sample mushrooms, whose weight “must be over 1 kg and under 10 kg.” An expressive formula Gm=Gx100:M is used to check the quantity of fresh mushrooms with a small diameter of caps. If the quantity fails to meet the established norm, the mushroom-picker concerned is punished “in accordance with the laws of the Republic of Lithuania!”
The flight of fantasy of Lithuanian bureaucracts is not confined to mushroom gathering. The officials decided, for example, that every travel agency must have at least one fax machine; or that companies may not have offices above the first floor; or that each company must have a director and an accountant. If we follow the same logic, we may live to witness laws that would require companies to have furniture or would ban denim clothes out of private offices or would require employers to hire only good-looking individuals.
Most Lithuanians realise that extensive regulation render many things irrational and even absurd. Yet, officials persist in producing new rules analogous to those on mushroom picking and mandatory fax machines. Regulations have reached the extent where there is hardly any sphere of human life safe from government interference. Regulations affect everything: business, labour relationships, production, services, prices, dwelling, the lingual and cultural heritage, and even morals.
Unable to cope with all the functions it devised, the state has delegated a number of them to businesses. Many of the functions cannot even be regarded as essential for running a business. Take, for instance, filling in special accounting documents, bills of lading and time-sheets, reporting to the Statistics Department and the Tax Inspectorate, implementing measures for money laundering prevention, issuing documents, etc. The pursuit of dubious governmental ends in such a primitive way is another (indirect) tax, since every action forced upon businesses inflicts severe costs on private money, time and labour.
Bureaucracy in Lithuania has proliferated to produce over 70 governmental agencies which are authorized to trespass on private territory and to demand documents and samples of production from the owners. Every day hundreds of functionaries go “to work” to officially inspect, or to racketeer, companies under the cloak of the holy mission of the state.
Let us look at the odds against a budding entrepreneur who wishes to start a café. First, let’s count how many government institutions are empowered to check the quality of food: the State Quality Inspectorate, the State Inspection of Hygiene, the State Centre of Public Health, the State Veterinary Service, the State Nutrition Centre, the State Grain Inspectorate, the State Plant Protection Service, the State Tobacco and Alcohol Control Service, etc. Another group of inspectors represents universal institutions for business regulation, such as the Fire-Prevention and Sanitary Inspectorate, the State Labour Inspectorate, the State Commission of the Lithuanian Language plus the Tax Inspectorate and the State Social Insurance Board. With each inspector, the entrepreneur will have to puzzle his head over the requirements of the inspecting institution in order to meet or buy them off.
God help the entrepreneur if he has decided to build additional premises by his cafe. In order to start construction, he will have to collect permits, documents and signatures from a total of twelve different institutions. Add another seven heritage protection agencies and the costs of polychronic tests in case the cafe is located in the Old Town. Once construction has been launched, the officials will demand quality and non-hazardous product certificates for the building materials used. Suppose some of the materials have been imported from Scandinavian countries, where no certificates are issued as the quality of products is verified before launching them. In this case, the entrepreneur will be forced to have additional tests carried out in a laboratory designated by the authorities. Of course, this will cost time and money. Ultimately, the bills will be paid by future customers or, if the new premises fail to yield profit, by the owner himself.
Suppose our hero has nonetheless overcome all of these obstacles and made a lucrative business out of his café. But the odds may be against him again. According to a project of amendments to the Law on Commerce, his business license may be revoked because of an illegal bottle of spirits or a packet of cigarettes detected on his premises, even if the alcohol or cigarettes were sold by some unauthorised security guard. Such a sentence may be passed not only by the court but also by state officials authorised by the police, the Customs Department, the State Tobacco and Alcohol Control Service or other governmental institutions.
We have looked here only at some of the regulatory obstacles faced by one entrepreneur, a cafe owner. A still larger regulatory jungle has proliferated in other business areas. Our newsletter is too small to describe them all.
The authorities are beginning to realise that people’s dismay at the ever-expanding regulations should no longer be ignored. High-ranking state officials have professed that ever-growing governmental authority is impeding the creation of well-being and must be curtailed. An interdepartamental commission was launched to reduce bureaucratic obstacles and regulations.
But isn’t this commission just a blinder? While it holds sessions and debates, the lower echelons of government devise new regulatory decrees in the corridors of power. The authorities committed to limiting governmental powers should in the first place declare a moratorium on the creation of new regulations. Second, they should present to the public and implement specific tasks designed to lift the burdens of bureaucracy and reguations. Instead of waiting for some miraculous salvation, the Lithuanian Free Market Institute is working on proposals for business deregulation and debureaucratisation of private affairs.