President Obama and Small Businesses

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English: View of the east end of the Ithaca Co...

At http://washingtonexaminer.com/55-percent-of-small-business-owners-would-not-start-company-today-blame-obama/article/2509069#.UGNK8q4yfCZ is a story revealing that 55% of small business owners would not start a business today, and that they blame President Obama for that. Democrats love to claim that “We are for the little guy,” but the small business owners with whom I have talked agree with the 55% in the poll. One owner of a flower shop told me that his business prospered best when Mr. Reagan was president, and that he is barely holding on under the Obama administration. The main reason is the poor economy–and this is something that cannot be wholly blamed on Mr. Bush, although he shares part of the blame. Mr. Obama has been in office for three years, and his massive spending of federal money has done no more good than did Mr. Bush’s massive spending. The “economic stimulus package” may have helped some businesses and educational institutions, but much of the money did not go to “shovel-ready projects,” as Mr. Obama claimed.

What is needed for small business to prosper is (1) a lessening of the regulatory load the federal government imposes on business, (2) a reasonable tax rate that does not overburden small businesses, (3) an end to the corporate welfare that favors large corporations over small businesses in a given community, and (4) higher tariffs and other ways to lessen the trade deficit and to stop outsourcing of American jobs. The Republicans agree with the first three factors–they need to follow Pat Buchanan and agree with the fourth. Still, three out of four is better than the Democrats’ zero percentage.

If the Obama Administration were only an enemy of large multinational corporations I could stomach that. They hold an unfair advantage over small businesses and often out-compete mom and pop operations by city, county, and/or state officials giving them large tax breaks. But the Administration has revealed its hostility to small businesses as well through heavy regulatory and burdensome tax policies. The massive spending of federal funds that has blown the federal budget deficit out to astronomical proportions helps keep investors nervous and helps keep the economy in a chronic recession. If a Republican were president, much of the media would be telling the truth which is that the United States is in a depression. The true unemployment rate that includes those who have given up trying to find the job approaches 15%. In some counties unemployment approaches 30%. The poor economy means that people have less money, and their lack of funds means that they spend less money–and small businesses, which are often more expensive  than large corporations, suffer first as customers seek cheaper products. The combination of poor sales and increasing capital resources to pay taxes and for renovations required by the government smothers small businesses. The economic ramifications of a second Obama term would most likely result in the ruin of many other small businesses.

Wall Street Protesters: Are their Criticisms Justified?

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Wall Street

The protests against corporate greed on Wall Street has spread beyond the borders of the United States–Italian police had to break up an unruly mob that was throwing rocks into buildings. I wonder if the buildings they damaged were owned by the corporations they despise–or whether they were family owned small businesses who were harmed by the damage.

Despite such bad behavior, I have some sympathy for the protesters. The banking industry almost singlehandedly destroyed the American economy. The repercussions could have damaged beyond repair European economies and led to a world economic collapse. When the regulatory shoe was pulled off the banks, their leaders did everything they could to get richer quickly by selling debt, dealing derivatives, and engaging in other risky behavior. The claim of some conservatives that the program that required banks to make home loans to the poor was responsible for the economic crisis is naive–bad loans were being made across all socioeconomic classes. Like most quick buck schemes, the bankers were bound to fail. Their greed devastated real people and their “punishment” was a reward–a multi-billion dollar bail out that would not have been given to most companies if they were in similar danger of going under. The banks were infamously thought “too big to fail.” Executives who failed were rewarded by the banks with huge bonuses. I can understand how the public can be angry when much of the recent federal debt is due to bailing out bankers.

The problem I have with the protesters is that they confuse capitalism with corporatism. Capitalism can flourish in a world without large multinational corporations. Small, community-based businesses in the older American of country and small towns can compete with each other but be close enough to their  communities to care for the people in them and be motivated by more than the profit motive. Local banks run by people with a stake in their communities have a better chance of being operated for motives other than mere profit. This is the world the Southern Agrarians–especially Andrew Lytle and Donald Davidson, wanted to return in a country dominated by huge corporations.

Some of the protestors might have sympathy with the Agrarians–there have been moves by some on the left to approach the right–especially Ron Paul supporters–about setting up capitalism in a way that encourages the local community in  a decentralized governmental system in which there is more personal freedom, a necessary prerequisite to people having room to operate small businesses. Generally, however, protestors support the same old tired socialist and Marxist systems that have failed in the past. By setting up in advance a false dichotomy with no third way, they end up supporting a system which has caused the deaths of millions of people and which has enslaved many more. Communism leads to hard-core oppression as government goes beyond its proper bounds of power and gains the hubris to think it can reverse man’s Fall.

Corporitism leads to a softer tyranny by manipulation (through a compliant media and business community). Social pressure is used to force individuals into molds that fit the corporations’ thirst for profit.  Corporate executives also lack knowledge, for the most part, of the branches of the company they are supposed to supervise–the efficient distribution of needed goods and services to local communities will be lacking. Communities desperate for jobs may sell their souls for a bowl of corporate porridge. Local resistance to large corporations often evaporates in the face of a threat from a corporation that it will not move a plant to the area unless it receives tax breaks and other economic incentives. Local communities need the jobs, and instead of encouraging small business investment, they go for a quick fix. Local banks fail, and branches of  large corporate banks open in their place. This brings jobs and capital temporarily, but corporations have become increasingly disloyal to their initial commitments to the community and have closed U. S. plants in favor of outsourcing to Mexico, Central and South America. Banks have put speculation over fiscal responsibility. In an entity as large as a contemporary corporate, money is the name of the game, and people take a distant second-place unless strong corporate leadership changes the ethic of a corporation. But that is a difficult task in a large corporation; the larger the corporation, the more difficult a change in its fundamental moral practices becomes.

The protestors are correct in much of their critique of corporatism, but are wrong in their Marxist solution to the problem. It would be better if they read the Southern Agrarians, especially Take My Stand, and authors such as D. H. Lawrence and J. R. R. Tolkien. These works offer a tertium quid that can shortchange the greed of the moneychangers.