It is almost as if we have grown up with the phrase: Governments choke us with their paperwork. Yet, we find ourselves passing this ‘disease’ on to the next generation. And paperwork especially clogs up small businesses, the backbone of many an economy.

It is an international phenomenon. It is estimated that Obama’s attempts to cut red tape have actually added US$23 billion in costs. In the UK, the government has released yet another scheme for small businesses, although one cannot fail to notice that this is just before a general election. And it is probable that over 4 years in office, the Conservatives have added billions in extra paper work.

Why is the issue critical? Look at any economy in the world. Typically, 95% of output is generated by small and medium-sized enterprises. These people may not make headlines, like Google and Boeing, but their taxes keep the wheels of fortune churning for countless others.

In theory, Israel, the so-called start-up nation, should provide a refreshing approach to this gloom. For years, the government in Jerusalem has provided subsidized funds for mentoring schemes, directed at small companies. The Office of the Chief Scientist matches investment funds for high-tech enterprises. There is a growing base of networking hubs and incubators.

And yet……….Underneath the hype, there has been a growing feeling that something is going wrong. Take the mentoring programme; of the hours allocated, maybe 10% has to be devoted to completing forms.

Just as damming is the Israeli culture of paying people late. On the one hand, local and central government should not be short of cash. Yet, in Israel, the private sector regularly pays out after 30 or 60 or even 90 days. The public sector has become accustomed to adopting this warped culture.

For a large company, that may not be a problem. However, if you are a small business, reliant on such contracts and tenders, your cash flow is unlikely to be strong enough to weather such delays. Remember, weak cash flow is a prime cause of the failure of small operations.

What do I mean? I know of one case, where a local town council deliberately held up payment to a building contractor for about 12 months so as to pressure him into lowering the final price. As for the mentors and coaches, they are frequently paid months after carrying out assignments. By the way, to apply to participate in a tender, each company has to immediately pay a registration fee, on time.

The point? All good politicians around the world pay lip service to the concept of the need to build up the small business sector. However, few create any practical policies. And most are happy to ignore the limitations and restrictions that their own civil servants impose on those they are supposed to be helping. The result – bureaucracy wins and economic growth is impeded, to the detriment of all.