coalition for
regulatory innovation

January 2, 2018

Elf: The Hollywood vs. Regulated Story

Another holiday season has come and gone, which made us think of our favorite fictional Christmas stories and how they may have played out a little differently in the real-world if they had to follow all the laws and regulations on the books. From Frosty the Snowman, to Rudolph the Red-nosed Reindeer, our favorite characters existed in a world of make believe where anything is possible.  But in the real world, regulations touch many aspects of all our lives, from the residents of Washington, D.C., to the elves working at the North Pole.  For a little holiday fun, we broke down modern classic movie Elf to analyze how many regulations—some perfectly justified, others duplicative—would have been involved with Buddy the Elf’s journey through the Candy Cane Forest, through the Lincoln Tunnel and into New York City.

Now presenting, Elf: the Story that Probably Wouldn’t

The Hollywood story

Buddy the Elf was raised by elves in the North Pole, making toys and feeding reindeer. After a couple of years, Buddy realizes he is much different than the other elves – he’s actually human! Shortly thereafter, Buddy leaves the North Pole in search of his father, Walter, who lives in New York City. While there, Buddy has a hard time adjusting to his new life, getting to know his family and working in corporate America. Buddy initially starts his “career” in the mailroom at his father’s office building, then moves on to become his secretary. Over the course of the film, Buddy continues working, while his father struggles with the constraints of his job and his ambition to become an entrepreneur. Eventually, Buddy saves Christmas, Walter starts his own publishing company and his first book chronicling Buddy’s adventures in New York becomes a best-seller.

This cute, warm, and fuzzy story had a very happy ending. But, because of heavy regulations in the business sector, Buddy the Elf’s story may have turned out a bit differently had it occurred outside the walls of Hollywood.

The Regulated story

Santa and his elves found Buddy when he was just a baby, and raised him as their own. But not long after, Buddy had to earn his keep and began working in Santa’s workshop. Child labor laws, anyone? Are the elves being paid fairly? And what about all that overtime they’re working in the days leading up to Christmas?  There are plenty of laws on the books here that serve to protect workers, but we can’t be sure about what’s in place at the North Pole.

The Occupational Safety and Health Act (OSHA) sets a number of regulations employers must follow in order to provide the best working environment for staff. Between making toys, flying around the world AND making sure his workshop remains in compliance, Santa must be really busy!

And speaking of Santa, has anyone ever checked to make sure he has the proper permits to fly internationally? And he pretty much just lands his sleigh wherever he wants. While we can’t be too sure, Santa could be in violation of the following regulations:

  • CFR Title 19, 122.24 of the Federal Regulations states all aircrafts flying into the U.S. must first land at an airport before continuing on to its final destination
  • AIM Section 6, 5-6-1 states an aircraft entering U.S. domestic airspace must provide identification prior to entry or exit
  • CFR Title 19, 119.5 states only authorized individuals who received an Air Carrier certificate are allowed to fly aircrafts…this includes sleighs!

And one last thing – should we be forced to pay taxes on those gifts, and occasional lumps of coal that Santa drops down the chimney? I mean, they are gifts after all! Federal regulation §20.2031-1 outlines the necessary steps Santa and every other toy workshop and business must abide by when giving gifts and donations.

But even with all of the magic and make-believe in this story, Buddy’s journey through New York City and easy transition into the business sector might be the most fictional element of the story. Buddy and Walter’s quick ascension into successful business owners may not have happened so smoothly.

For starters, Buddy’s entry into the U.S. and into the workforce is far from believable.

  • 8 CFR 235 of the Federal Regulations states anyone entering the U.S. needs a passport and is subject to inspection by U.S. Customs and Border Protection officers
  • 12, title 8 states Buddy would need and Employment Authorization Document before working in his dad’s office. Depending on how long he intended to stay, Buddy would need a green card, a visa, or a worker’s permit
  • 14 CFR 145.163 requires aviation mechanics complete rigorous training before operating on aircrafts. This must have slipped Buddy’s mind when he fixed Santa’s sleigh and flew around Central Park!

And then there’s Walter, Buddy’s dad. He quit his job on a whim and almost immediately opened-up-shop as an entrepreneur. Again, federal regulations would have slowed down this process just a tad. Here’s a couple reasons why, according to the U.S. Chamber:

-Government regulations disproportionately affect small businesses. With limited resources, regulations account for a large portion of operating costs for small companies.

-Federal regulations place a burden on the economy via direct costs, lost productivity and high prices. And, those costs are 20 percent higher than average for small businesses than other firms.

-On average, small businesses pay more than $11,000 per year per employee in regulatory costs, 36 percent higher than the cost of regulatory compliance for larger businesses.

-As stated in a U.S. Chamber of Commerce Foundation 2017 report, “An aspiring business owner may face the challenge of having to deal with regulations and rules promulgated and implemented by multiple state and local governmental units, in addition to dealing with federal requirements. The very amount of points of contact to be navigated presents a potential stumbling point to small business establishment and growth in all areas of the country.”

Of course, this exercise was all in good holiday fun.  But it’s easy to forget how present regulations are in all our lives.