Give Niall Ferguson a Sour Economy, and He’ll Make a Spurious Lemonade-Stand Parable

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The economist Niall Ferguson had a piece in Newsweek the other day entitled "The Cure for Our Economy’s Stationary State." As in his most recent book, the Harvard historian pointed out that the economies of the United States and Europe have lost their dynamism, while China is leaping ahead. The solution? More technological innovation, says Ferguson, along with "more free trade, more encouragement for small business, less bureaucracy, and less crony capitalism." Especially less bureaucracy.

Question: if you want to open a lemonade stand in New York City, how long does it take to jump through the necessary bureaucratic hoops? The answer is 65 days (including a wait of up to five weeks for your Food Protection Certificate). That’s the kind of crazy red tape that development economists like Hernando de Soto used to blame for Third World poverty.''

Alas, I don't know anything about Hernando de Soto, but I do recognize a lame journalistic convention when I smell one, and sure enough, the "65 days'' Ferguson cites with triumphant specificity comes not from any academic institution or think tank or good government group, but from John Stossel, the libertarian gadfly of Fox News.

Last February, Stossel got worked up because some excessively officious cops in Midway, Georgia, closed down a lemonade stand operated by two sisters, 10 and 14. Appalled by this lack of common sense, Stossel decided to see what it would take to open a lemonade stand in New York City, and he had a high old time making the city seem stupid for requiring him to have a fire extinguisher and to take a food-preparation course and get his tax payment arrangements properly set up. In the end, Stossel did not actually complete the exercise; had all the inspections been conducted as scheduled, he says that the exercise would have taken — ta daaa — 65 days.

Of course, it's absurd to suggest that lemonade stands would need regulation, and the vast majority come and go without the heavy hand of Big Government crimping anyone’s entrepreneurial style. (Stossel himself set up a stand on Sixth Avenue in front of News Corp. headquarters before his approval process was completed, and the police ignored him.) What made the exercise seem so ridiculous, of course, is that the tendentious Stossel was obviously completing the program that a full-fledged restaurant would have to go through: food-preparation courses for chefs, regular Health Department inspections, and a fire extinguisher on the wall. And 65 days doesn’t seem like an excessive amount of time to complete the process.

Ferguson, meanwhile, cites the 65 days like it was written at the bottom of the tablet Moses brought down from Mount Sinai. A reporter’s gimmicky stunt now has the imprimatur of a Harvard historian. And Fox News still loves the lemonade gimmick, interviewing two little girls about their lemonade stand as part of the Barack Obama "you didn't build that" faux-troversy.

In the meantime, let’s declare a moratorium on lemonade-stand regulation. The drag on the economy just isn’t worth it.