Open for (Small) Business

Radical Centrism Policy Papers 1

I start these ramblings with a critique of the way the left and the right view American business: both appear to see business activity as a monolithic economic function. What this perspective misses are the vast differences between small business and large corporations. These are not — in effect and process — only matters of scale. Instead there are huge qualitative differences in character and effect on our social fabric that militate for considering small business as entirely different from large corporate entities.

In a reasonable world, these (small) businesses should be assisted and protected.  When treated with the same heavy hand as large corporations, they can easily become discouraged about whether they can “get clear” of the administrative, tax, and regulatory burdens and get to work on delivering the product of their vision.
Liberal Dialectic on Business.

The problem with the liberal perspective on business is that there is a tendency to lump small businesses with global corporations when it comes to regulation and taxation. That can easily represent an almost unworkable burden for “chief-cook-and-bottle-washer” businesses where the owner(s) are forced to assume many roles (for which they may not have an ingrained talent) and many different types of expertise just to comply with all the regulations and requirements thrown their way.  Studies show that small businesses pay roughly double the amount of regulatory dollars as a percent of gross income as large corporations, which have whole departments to assure (and manipulate) compliance. Not to mention that small businesses, in spite of their best efforts, are prone to costly mistakes in over-compliance or non-compliance out of ignorance, leading to severe penalties. Small businesses feel acutely the absurdity of big government bullying and that things are “stacked against them,” because they are! It has made a whole generation of modern small businessmen into rabid anti-government conservatives, while their sentiments and their beneficence to their local communities betray quite the opposite kind of caring for their fellow man.

Conservative Dialectic on Business

The problem with the conservative dialectic on business is that they (perhaps cynically) extrapolate from the very real burdens on the smallest businesses to argue for elimination of any regulation and taxation on business at a national or global scale — opening the way for exploitation of labor, exploitation of resources, environmental degradation, milquetoast standards, etc. This forced conflation has been a long-term strategy by large corporations to obfuscate their enormous scope and impact (often the size of nations) and instead wrap themselves in the mantle of the Mom and Pop business down the street. Make no mistake: they are not. Conservatives ignore that these are businesses who have the scale and organization to easily, within a very profitable enterprise, to devote personnel to compliance with environmental, safety, and tax regulations that are genuine burdens for smaller business. Not to mention that lax enforcement at the scale of operations larger corporations represent can result in damage beyond reckoning to the common good.

So, suffice to say, Radical Centrism recommends treating each type of business as radically different — in fact there’s probably a sliding scale of policy response between the smallest businesses, who need the greatest assistance to bring their idea to the marketplace and survive, and the largest businesses who need significant controls and regulation so the rest of us can survive!  (Once the difference is established in principle, research and discussion would have to go into developing and adjusting to business functions at various scales, which I don’t have the time or expertise to even suggest here. But no doubt that would be a lively discussion!)

For now, please indulge my treating these two ends of the the scale as two different animals. For this post, my preference is to focus on small business first. Policies related to national or global corporatism present a much more complex set of the positive and negative impacts and will be delayed to a later post.

Small Business Is a Community’s Lifeblood.

It’s almost self-evident that entrepreneurial individuals and local businesses are the lifeblood of small communities and cities across this nation. Their optimism is a uniquely American asset. They are the driver of opportunity for ourselves and our children as well as the “melting pot” that supports and integrates immigrants and refugees into our social fabric and our common civic conversations. Their services and their function help bring us together into gathering places like stores and business districts where news, and citizenship, is shared.

In a reasonable world, these businesses should be assisted and protected.  When treated with the same heavy hand as large corporations, they can easily become discouraged about whether they can “get clear” of the administrative, tax, and regulatory burdens and get to work on delivering the product of their vision. Here are some other advantages to small businesses within local communities.

  • They hire more people than anybody, both in our national economy, and in the communities they serve. (They also lose jobs more frequently, but that’s another story.)
  • They are tremendously giving to their local communities both of financial and in-kind donations. Along with business-based philanthropic organizations (like Rotary Clubs, Chambers of Commerce, etc) they are the pillars that encourage and lead the giving community.
  • Their behavior tends to be moral, probably because they are rooted in their communities, where reputation is king. They are typically good to their word.
  • It is very important for liberals and progressives to remember that small business entrepreneurialism is not that different from the “workers” that play such a prominent role in the liberal dialectic (for good reasons). In fact, one the main options when wages or job opportunities stagnate because of macroeconomic conditions is for people to go into business for themselves — to finally put their own ideas and creativity to work! Once “workers” cross over to “entrepreneurs,” it’s so easy for them to be radicalized (in a rightward direction) by the treatment they receive from government and the progressive community.

Bottom Line: Small business creation is seriously, perhaps critically, faltering in the U.S., especially since the Great Recession. The regulatory and environmental burdens and limits on access to capital because of heavily regulated small community banks, are threatening this lifeblood of local communities (and US innovation). These barriers to new business creation must be radically reversed. Under RC, individuals who hazard to create something new in product or service should be rewarded, not squelched, by our bureaucracy. Much of the value of small businesses comes from the fact that they ARE inefficient. And they are fragile. As a body politic and a society, we need to help them to succeed, at least until they grow to some predetermined size when their character within their communities starts to change.

Taxation. In most cases, local corporations are helmed by their owners. It is fair that tax policies recognize and avoid double taxation whenever possible.

Ombudsman/Funding. Environmental and safety regulations are important for the common good, but can present as a substantial burden to a small business. Is it reasonable to consider the notion of a small business ombudsman/friend and perhaps a pool of funds to help them comply with regulations? This way we could reverse the role and reputation of government, remove some common barriers to business formation and survival, while still maintaining reasonable safety and environmental protection.

Our challenge as Radical Centrists is advocate for policies that raise local businesses and make it easier for them to operate, hire people, comply with regulations, and make money — without abandoning our obligation to control the negative impacts of larger businesses who’ve become bureaucracies themselves, divorced from their community or, often, their nation of origin.

So today’s question is simple: Do you agree with this analysis that small businesses and multi-national corporations are so different in degree that they need to be treated as qualitatively different?  Why or why not? 

Mystified?  For an overview of Radical Centrism go HERE

  1. I totally agree with your concept. The problem is that government bodies see no difference. All are sheep to be shorn or potential polluters or scofflaws to be prevented from harming the “public welfare.”
    Surely no one could advocate for any differences in maintenance of public health and safety issues as applied to these smaller businesses. If so, why should these folks get any kind of pass from contributing their Fair Share in taxes to support an ever growing, ever watchful government?? Why the next thing you know they might get the insane idea that they can actual build their business quite well without the help of government

    While I am at it could someone explain to me why it is necessary to have cameras on every corner throughout most downtown areas.?All likely hooked to facial recognition computers. You must be up to something Mr Metadata or else they wouldn’t need to be able to track every move you make

    The whole idea of government is to control things.
    Public health. Public safety Public commerce
    Public discourse. But since We are the public it has been morphed into control over individuals. Private commerce. Private discourse (can’t have anything said that makes anyone feel threatened or hurt, you know). And so forth. The concept that there might be any rollback of regulation or taxation is simply anathema to those who advocate for regulation to control every minute aspect of our lives

    In that sense both parties are complicit in the overregulation of our lives. No one is for smaller or more limited government. The parties simply advocate for one segment or the other of our population to get More of the benefits, to be paid for my the others

    Notice the language: Tax cuts must be PAID for by compensatory increases elsewhere!!! It is as though the money is the governments’ not ours. How about if the government simply gets by on less? The concept of zero based budgeting is obscene. It implies that every year the zero line starts at funding of the last budget. As if nothing could ever been eliminated as unnecessary. So a tax cut is never on the table. Only a reduction in the rate of increase

    Coming back to your premise. I am 100% behind you. Just don’t stop there.

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  2. Shal
    Thanks for your comment. While I’m not sure I can agree with your premise, that appears to be that everything would be just fine if there was no regulation, I can clearly see that the relationship is too often skewed by the power dynamic between the vast government with rigid accountability rules and the individuals and small businesses they impose their regulation upon.
    Rather than zero based budgeting, I would like to see a rebalanced mission for the regulatory apparatus. Perhaps you could do a guest column when I am ready to explore this topic.
    Two last observations: 1) the actual impulse behind environmental and safety regulation makes a lot of sense to me: we already know what a free-for-all with the environment, safety, and labor looks like, and it’s not a world that I’d like to live in or work in (I remember Los Angeles in the 60’s, not that I could SEE it). The question is whether we can right-size our regulatory response and actually participate in paying for those goals based on the size and capacity of the ‘customer’
    2) most of the budget of the USA is spent on useful services like Medicare, social Security, health care, services like parks, security, and military spending. Zero-based budgeting for all this would be impossibly complicated just to get at a small slice of our regulatory framework. Better to get some bright minds in attacking the problem of the government relationship to its citizens and coming up with a better model. More to come…

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  3. Meta

    The devil is in the details when it comes to governments impact upon our lives. I have read Sinclair Lewis. No way I want to go back
    To his era
    But again why is it necessary to put cameras on every corner and know everything about your life and mine?
    Provide for public safety. Wage peace. Provide a safety net for the most vulnerable. Set a standard of morality and ethics for the nation AND themselves ( don’t forget to close the door on your way out Mr Frankenstein). Manage the monetary system for the benefit of All not just the wealthy. Tax fairly and tax at the lowest possible rate. Eliminate those programs and departments that have outlived their usefulness or need
    Treat all our citizens with respect and dignity and De Militarize our police. It is scary to see community police riding in tanks. Yes, Black Lives Matter. So does mine. So does yours
    We live in sad scary times

    Shal

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    1. Great to hear. We seem to agree on so much. Part of my concern about social media is the so-called “security” of invasive tracking by government agencies. Metadata indeed!

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