Fred DeLuca, who founded the wildly successful Subway sandwich chain in 1965, told CNBC on Wednesday what every small businessman in America knows. Government regulations have become so great they have throttled the ability of entrepreneurs to create new businesses:
Simon Hobbs, CNBC: You know, it's 13 years since you wrote the book Start Small, Finish Big, which was about grassroots entrepreneurship. Do you think the environment for those that are chasing the American dream by setting up their own business has gotten worse or better in those 13 years?
Fred DeLuca, Subway Founder: It's continuously gotten worse because there's more and more regulations and it's tough for people to get into business, especially a small business. I tell you, if I started Subway today, Subway would not exist, because I had an easy time of it in the '60s when I started and I just see a continuous increase in regulation. . .
People say they have a lot of challenges. They can't get loans, there are a lot of problems out there.
The National Federation of Independent Business agrees with DeLuca's stark assessment. In an August 2012 study, the organization found that:
In the last four years, the federal government approved legislation to overhaul the financial industry, the healthcare system and promote economic stimulus. The upheaval in policy changes is immense and will continue as the regulatory system works to implement the laws’ directives.
In addition to the headline reform efforts, regulators of other government agencies are also broadening rulemaking efforts in areas of employment and the environment. Uncertainty also surrounds pending government action on ... the debt ceiling and the federal budget. All of these policy changes and those yet to be visited, create a huge “question mark” for small-business owners, impeding their ability to make short and long-term business decisions.
The debate surrounding the so-called "sequester" cuts makes one thing clear. The Obama administration fundamentally misunderstands the source of economic growth. They believe it comes from increased government spending and more regulation of businesses of all sizes. Fred DeLuca and hundreds of thousands of American small business owners know otherwise.