Barrier to Entry

Economists talk about something called "barriers to entry"--that is, the impediments to those wishing to become producers in a particular field. The barriers to enter the car market, for instance, are quite high---first you have to spend millions of dollars to even begin operation and then you face a labor, regulatory and competitive environment that imposes incredibly high costs on a would be producer. No wonder you don't see very many auto industry start ups.

I have a friend who works in big agribusiness as a plant breeder. I asked him if he was working on any genetically modified seed (GMO). He said no. The reason? He is a tomato breeder--the tomato seed market is much smaller than, say, the corn or soybean market hence his company cannot justify the start up costs associated with GMO seed. Why would GMO seed be more expensive than traditional hybrid seed? Well, the $15,000,000 permit a company must obtain from the USDA to market the seed, for one! Talk about a barrier to entry!

It is absolutely unbelievable to me that such impediments are placed in front of would be producers. This is 15 million dollars just for the right to market--they provide no service or tax credit or any benefit whatsoever! Ridiculous. So, stop complaining about a recession and ask the government to get out of the way of economic growth.