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