Recently, in a conversation more nourishing intellectually than anything on the menu, I spoke with Harold Ginsburg, the proprietor of Art’s Delicatessen in Studio City. This venerable institution has survived wars, recessions, disco, Atkins, keto and every culinary fad since 1957. In a city that treats permanence as an affront to progress, Art’s endurance alone qualifies Mr. Ginsburg as an authority.
One does not lightly dismiss the testimony of a man who has kept pastrami warm and the lights on for nearly seven decades. I asked him a simple question: What is the most challenging part of running your business today? He did not pause to romanticize supply chains, nor did he bemoan the alleged fickleness of modern diners.
He answered plainly: government overregulation and over-taxation – local, county and state – stacked like a bad sandwich with too much bread and no meat. The ever-rising minimum wage, he explained, is not an abstraction debated in graduate seminars; it is a monthly reckoning that arrives with cruel punctuality. Payroll does not care about intentions.
Mr. Ginsburg has done precisely what civics textbooks prescribe. He has spoken with elected officials. He has patiently explained that mandates issued from comfortable offices have consequences in cramped kitchens. He has described shrinking margins, expanding compliance costs, and the impossibility of absorbing both indefinitely. He has been met, consistently, with the modern politician’s most practiced maneuver: sympathetic nodding followed by total inaction.
‘Arithmetic…does not negotiate’
The result is visible to anyone willing to read a menu honestly. A $22 hot dog sandwich is not culinary decadence; it is an economic X-ray. It reveals the fractured bones of a system in which well-meaning regulation becomes a blunt instrument, and taxation is treated as a moral good rather than a practical burden. This is not greed. It is arithmetic.
Economists have been warning about this for decades. George Stigler, a Nobel laureate and the father of regulatory capture theory, argued that regulation often serves political rather than economic interests. Meanwhile, Harvard economist Edward Glaeser has shown that dense regulatory environments disproportionately harm small, legacy businesses while favoring larger firms that can amortize compliance costs across scale. Art’s Delicatessen does not have a compliance department. It has a kitchen.
Minimum wage policy, too, is routinely discussed with moral fervor and empirical sloppiness. While economists disagree about marginal effects, there is a broad consensus – documented by David Neumark and William Wascher in multiple peer-reviewed studies – that sustained wage hikes increase prices, reduce hours, and accelerate automation, particularly in food service. The cost does not disappear; it migrates – from payroll to menu.
Public choice theory, pioneered by James Buchanan, explains why this persists. Politicians gain immediate applause for mandates but bear none of the downstream costs. The bill arrives later, quietly, stapled to a laminated menu. As regulatory scholar Cass Sunstein has noted, policymakers systematically underestimate cumulative burdens because each rule is evaluated in isolation – businesses, however, experience regulation cumulatively and suffocatingly.
This is how a $22 hot dog happens.
Legacy businesses like Art’s are not nostalgic artifacts; they are social capital. Sociologist Robert Putnam, in “Bowling Alone,” demonstrated that long-standing local institutions build trust, cohesion, and civic stability. When they disappear, communities lose more than sandwiches – they lose connective tissue. Yet regulatory regimes treat them as interchangeable with venture-backed chains engineered to survive precisely this environment.
Ironically, the very policies sold as “protecting workers” often hasten the disappearance of the workplaces that once offered stable, entry-level employment. A study from the National Bureau of Economic Research found that restaurants facing repeated wage and compliance shocks are more likely to close or consolidate, reducing competition and raising prices further. Consumers pay more. Workers have fewer options. The government collects applause.
Arithmetic, unlike ideology, does not negotiate.
A $22 hot dog is not a punchline. It is a warning flare. It tells us that a system designed without respect for margins, scale, and cumulative burden will eventually consume the very institutions it claims to champion. When policymakers ignore the ledger, the ledger eventually responds – mercilessly.
And when that happens, no amount of sympathetic nodding will bring back the deli.
Michael Levine is a veteran Los Angeles public relations executive who has represented Academy Award and Grammy Award winners. He has written many books including “Broken Windows, Broken Business.”
