Sunday, October 23, 2011

Warp speed Regulation

Warp speed Regulation
The Logic Factor
Defense against Government
By Stephen L. Wilmeth

     Agriculture is one of the most profound platforms to develop logic.  Others might suggest fields of military battle are more profound.  Others yet will say that there is nothing more sobering than pediatric surgery, and how could that point be argued?  Those people who hold the lives of those innocent little people in their hands command respect.  I have no idea how they could recover from a mistake.
     Fortunate is the individual whose experience doesn’t include a mistake, but, unless there is an experience that demonstrates definitive results, lasting progress may not ever be accomplished.  Good, bad, or indifferent, the development of logic comes from experiencing factor altering situations.  Mistakes are usually the most common guiding forces. 
     Policy Guidance
     I sat one day in office of a well known vegetable producer.  Years prior, his family had expanded their operation to Bakersfield, California.  We had been talking business and the conversation gravitated to policy and procedural manuals. 
     I asked him about his company manual and what he said surprised me.  He informed me his manual, the guiding document for the world’s largest producer of a product, was a piece of paper that indicated his company had no policy and procedure manual.
     In a world of endless regulation, government interference, and agency minefields, how could any company operate without a manual?  The owner’s rationale was that there were so many conflicting rules and regulations that any written policy would and could be used against him by an investigating official if something major took place.  It was better to acknowledge there was no official policy so that each incident could be investigated and acted upon based on current conditions.  He claimed that his approach had been tested and it worked.
     My philosophy of such manuals was counter to prevailing practices, but it wasn’t quite as extreme as what I had just experienced.  When our company needed a safety manual we were guided by our Human Relations director and on our laps was dumped an immense binder.  After studying it, it was clearly apparent to me that 80-90% of the plagiarized gobbledy goop it contained had absolutely no place in our work environment.  We rejected it . . . and shortly thereafter we rejected the HR supervisor as well.
     Shape your battlefield
     The approach we took was to ignore the experts and create out own document.  As it evolved, it was apparent that there would never be a first and last page as long as the business existed and evolved.  It was also apparent we were not experts at anything until we actually experienced the situation and worked our way through it.  It was then we could assess the situation with enough insight . . . logic . . . that a near intelligent procedure could be crafted. 
     We were chastised by the experts we encountered.  “You are going to be in trouble if you get caught without proper policy and procedures,” was the warning from the experts. 
     A near tragic event occurred that demonstrated the situation we faced with multi-agency oversight.  We had developed a cut apple product that had a 30 day shelf life.  The product was run on a line that consisted of mechanical peelers, sorting tables, color sorters, inspection belts and automatic packaging equipment.
     Agency oversight was constant, and the Health Department was our most frequent visitor.  They approved the protocol for the mandatory daily cleaning.  Their protocol required the equipment to be exposed and running so that all surfaces could be cleaned thoroughly.  We honored their demand.  We had no choice.
     Early one morning in a cleaning cycle an employee hung a brush in a tail pulley and he was pulled into the drive chain.  His hand was nearly cut off.
    OSHA was called and the blame process started.  In the hearing, the Department of Labor hammered us regarding the exposure of employees to running equipment without proper guards.  The Department of Health official told the court the cleaning process had to be done exactly as we had been doing.    
     In the ensuing threat and counter threat display that continued we sat and watched the agency representatives battle.  Regardless of our plea regarding the Health Department hygiene demand, it appeared we were going to be fined or even shut down by the Department of Labor.  
     Finally, we suggested the installation of expanded metal guards and shields so exposure could take place for cleaning while employee safety could be maintained.  The judge concurred, the Health Department representatives nodded affirmatively, the OSHA report was issued, and we were handed a citation by the Department of Labor.  Neither the judge nor the Health Department even questioned the citation.  The reminder that the government will always seek a scapegoat in the private sector was clearly demonstrated.    
     There was no way that approach could have been envisioned until that unfortunate series of circumstances occurred.  We conceptualized the only practical approach for resolution.  It was accepted.  Neither agency would have allowed the new protocol until that administrative judge ruled on the process.  We wrote the updated policy on the basis of experience. 
     Weeks of production were lost.  Questions about the viability of the product were raised in its temporary absence in the market . . . we were the villains . . . we were experts . . . we introduced a better way to deal with a real problem. 
     Announcements and destruction
     The warp speed growth in government regulations has not only accelerated every year since 1976, it is past the brink of going viral with pending policy and procedural fallout from the Obama social legislation. The legislation isn’t simply the driver of this insanity.  The policy development from the cabinet controlled agencies charged with the management of the legislation is where the accelerator is stuck.
     The recent contamination of cantaloupes grown in Colorado is yet another example of government’s inability to guard against a tragedy.  It is also a demonstration of government’s ability to cripple an industry segment.  How many believe that the plight of that grower in Colorado didn’t reach every cantaloupe grower in the nation?  Every time a spokesperson from the Center of Disease Control gave an update, there was a corresponding decrease in the sale of all cantaloupes. 
     Similar crises have occurred in recent memory in apples, apple juice, hamburger, lettuce, pistachios, and spinach.  Universally, consumers will say that it is the responsibility of government to communicate such risks to the greater public.  Does that same right give the authority to the government to destroy innocent producers who happen to be in the same market when a tragedy occurs?
     The need for more insurance
     As government has grown, too many producers have realized they are facing an increasingly dangerous foe.  Sophisticated buyers of businesses brutalized by such government actions are increasingly building into their pro forma reviews discounts on expected prices because of the risk government poses. 
     Others are increasing insurance policy coverage that would protect against such assaults.  American business segments are posturing to figure out how to protect themselves from the uncertainty of actions that may be forthcoming from their government.  The menace of government action has actually become a matter of expanded risk assessment . . . think about that.   
    Back to Logic
     The vast majority of policy is written by officials who have never spent a day in a business at risk in a free market.  Most policy writers exist in an atmosphere free of logic developed through the risk of failure, and there are limited measures to reset any balance.
     Departments, agencies, and institutions are staffed and perpetuated from home grown bureaucrats produced within their systems.  New directors don’t come from the industries their efforts oversee.  New directors are not judged by the money saved for taxpayers.  New directors are not people who must conceptualize how to exist in the presence of an ever expanding and ever more intrusive central authority.  They are products of the empires they grow and protect.
     In a recent day real world acquisition process, several very capable buyers came to the conclusion the price of the offering must be discounted in order to be prudent for their investors.  The reasons were not the current outlook for the particular commodity.  On the contrary, the commodity has all the appearances of heightened opportunity. 
     The rationale came from government action in the cantaloupe contamination debacle.  Implicit in the price reduction was the risk government poses over the life of the investment. 
     Our system is upside down . . . double, triple, quadruple the regulation burden and the results will not provide more protections . . . but capital will flow to havens of less risk.  The question must be asked . . . who is better off? 

Stephen L. Wilmeth is a rancher from southern New Mexico.  “If the line used to run the Colorado cantaloupes had been fully exposed for daily cleaning, the tragedy would likely have been averted.”

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