Government can do one of two things to business, it can expedite its growth by creating an environment with low taxes and minimal regulation or it can make taxes, permits, and regulation that are nothing more than roadblocks to entrepreneurs.  On a vacation to Kauai, Hawaii, this simple fact was demonstrated. Kauai is a beautiful island known as the “Garden Island”, and it is luscious, green and magnificent.

On Kauai, there is the Kauai Cigar Company, which was born out of the Blair Estate Coffee Farm.  According to the marketing brochure for the cigar company, the company is a place where “diversification and expansion are part of the intrinsic spirit.” You can read this to mean that they are an entrepreneurial group of people that run the company/farm.

But what really hit home was a message that you find later in the same brochure: “While it took nearly 6 months to obtain a federal permit to manufacture and sell cigars, the reporting, bi-monthly federal taxes, and whopping nearly 40% Hawaii wholesale tax made it financially impossible to hand make cigars in Hawaii.”  So what did these entrepreneurs do? They found a company in Nicaragua to roll and manufacture the cigars.  While a testament to the fact that the world is flat and that entrepreneurs will not be stopped by government silliness, it also demonstrates the backward thinking of many governments.  Instead of having jobs in the U.S./Hawaii for this work, the Kauai Cigar Company ships their cured tobacco from Hawaii to Nicaragua and then back to the U.S.  While we can congratulate them for their creativity and ability to make their business work, we have to shake our head at the stupidiy of the Hawaiian and U.S. governments.

This entry was posted on Tuesday, October 14th, 2008 at 9:00 am and is filed under Economics, General Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.