Politicians and Small Business—just Lip Service

 

It’s right up there with Mom and apple pie in the political lexicon: small business.

Everyone knows that small business creates jobs and it creates them quickly. Ergo, politicians are constantly proclaiming their adoration for small businesses. However, their idea of how to foster new businesses seldom extends beyond tax cuts.

Politicians believe small business carries a heavy burden of tax. By implication, the only impediment to the success of small business is tax. In reality, tax is a minor ache in the small business body. To pay taxes, small businesses must show profit. Most are in profit intermittently. So a bill proposed by newly elected U.S. Rep. Betsy Markey (D-Colo.), which extends the period over which income can be averaged from two to five years, should bring some relief.

In the decades since the end of World War II, the owners of small businesses—from restaurants to light manufacturing—have been pushed to the wall by government action at the local, state and federal levels; all of which have favored the growth not of small business but of big business. At the state level, the big lobby and the small are voiceless. At the federal level, big businesses are on the congressional doorstep with campaign contributions, while small business is an abstraction.

In particular, the kindly treatment of chain retailers in local planning has pummeled and even destroyed small businesses. The arrival of a Home Depot in my semi-rural neighborhood meant summary execution of about 25 hardware stores.

Lower prices and some convenience sucked the customers out of the locally owned hardware stores. But it was a dubious bargain. After the initial enthusiasm, indifferent service and total ignorance of the stock reminded those customers that they had traded away expertise and service for a few cents of initial savings.

The big box stores–some of which are now going out of business–not only crush their small retail competitors, but they also crush their American suppliers by demanding prices that compete with those of cheap-labor competitors in other countries.

Got a great idea for a new type of oven mitt? OK, you will have to try and get your product on the shelves of the big retail stores. There are not enough other outlets. Gird your loins because you are about to go into a bruising negotiation with these retailers. To them, you are no more than a sharecropper. They want low prices and you, the small business manufacturer, are going to deliver them or perish–or, maybe, deliver and perish anyway.

How about the predicament of the travel agencies? Like bookstores, there was something genteel and very appealing about operating a travel agency. It was a lot of work for a small income, but travel agencies provided an independent living for tens of thousands of individual operators, and sometimes families. With deregulation the airlines took against the agents, refusing to pay commissions. This parsimony has not saved the airlines, but it has greatly undermined the travel agents and the service they provided.

It is not just the entrepreneurial class that has suffered from chains. We all have. Just look at their natural habitat: the shopping center. From Miami to Seattle, shopping centers are offensive in their sterility and their replicated chain-store banality. Is this the American Dream? Architecturally challenged, bland, homogenized, remotely owned shopping centers. They are not American Main Street replacements.

A thrill goes through me when I find a strip mall showing its age. There I know I will find small businesses with a fist full of employees booking cruises, repairing televisions and vacuums, and selling things from crystal to to yarn. In old industrial parks, small companies make everything from custom chimney pots to industrial fasteners.

This is where American dreamers have found self-employment and have the sense of possibility and the certain knowledge that they are small enough to fail. It is also where the jobs are, my political friends. Small business is driven as much by romance as profit. It offers the individual a chance. It also hires quickly.