REUTERS/Keith Bedford
- Small businesses are bogged down in a costly regulatory system, said JPMorgan CEO Jamie Dimon.
- The country must properly manage and review regulations to solve the problem, he said.
- "Very often local regulations are simply a form of low-level corruption," said the CEO.
- See more stories on Insider's business page.
Bureaucratic red tape is hindering small businesses in the US with excessive paperwork and requirements, JPMorgan Chief Executive Officer Jamie Dimon said in his annual shareholder letter.
"We have a litigation and regulatory system that is costly, crippling small businesses with red tape and bureaucracy," the CEO wrote.
American capitalism is "bogged down in a maze" of red tape, he said. The US litigation system costs 1.6% of gross domestic product, which is a percent more than the average country in the Organization for Economic Co-operation and Development, he said.
"Take 10 small business owners out to lunch and ask them what they need to do to meet local, state and federal regulations, and you will understand the problem."
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Business owners must deal with an excessive amount of licensing, paperwork, and employment and insurance laws, which can be crippling and even limit the number of new businesses, he said.
"Very often local regulations are simply a form of low-level corruption in which bureaucrats are paid to slowly … move … paper … around," the long-time CEO said, noting that bad regulation "stifles competition."
To solve the problem, Dimon said the country must properly manage and regularly review regulations.
"Smart regulation includes continual improvement, constant cost-benefit analysis and a review of purpose and objectives, which are reported honestly," he said, adding that he does indeed want "good regulations and good guardrails."
He noted the Federal Aviation Administration as an example of how regulation could change. He said the agency has been unable to adopt new air traffic control technology that would cut flight times by 10 minutes and greenhouse gases by 12%.
Meanwhile, much of the world, he said, has already adopted the new technology.