Time was that being a business owner was a swell thing. You ran a company, employed workers, joined your local chamber and gave money to local philanthropies. It felt good, and people looked up to you. Today, that's not exactly the case.
While it's true that most politicians make kissy faces at small business owners, the "job-creating engines of the economy," they also do everything in their power to make the risk of owning a business unacceptable.
Don't be fooled by the Startup Initiative just released by the WhiteHouse. Buried at the bottom in the last bullet-point is the real focus of the piece - campaign literature for states that Obama needs to carry in 2012 to be re-elected.
- Foster innovation and entrepreneurship in states and regions such as Ohio, Indiana, Michigan, Minnesota, New York, and New Orleans
I'm sorry, but taking someone from AOL to teach small business start-ups? That's typical of Washington thinking.
What can actually be done to boost small business job creation? Very little by this president. We are facing major structural and attitudinal changes in the way we approach the economy, and a president that falsely accuses doctors of cutting off feet for profit, tells bankers that he is holding back mobs with pitchforks, and supports people like Van Jones who preach "social justice" as everyone having the same economic outcome just doesn't get it.
Small businesses are not start-ups. There's a huge difference in what you're trying to achieve. At issue is the very definition of a start-up and what people want from it. Start-ups are generally seen as a vehicle for quick money, rather than as a drive to improve a marketplace or improve a community. While there is nothing wrong with making money, those who make fast money building and selling a company emerge as different players than those who spend a lifetime or generations building a company. That has a big effect on the next wave of entrepreneurs. Who wants to dig in and work 70 hours for 30 years when you can bust your hump for 5 years and walk out rich with plenty of leisure time? Of course, for most, this doesn't happen, but the dream is more powerful than the reality.
A tech company is a lot more exciting than a janitorial supply company. Which do you think has a higher success rate in creating millionaires?
The quick money paradox didn't just happen - it was also a reaction to decades of new regulations from all levels of government. Trying to build and run a company is hard work, and we've made it harder with paperwork and laws that on one hand are aimed at "fair" labor practices, but in reality make it not worth it to build a company over a long period of time.
It's the modern dilemma. Laws designed to prevent exploitation of the lower and middle class choke off the jobs that employ the lower and middle class. In our effort to be fair and just, we've simply not made it worth it for tens of thousands of highly qualified people to take the risk of starting a business.
I recently had a lengthy conversation with a friend of mine whose college roommate moved overseas to start a business. The roommate was a mid-level worker, nothing much to see in his job. 1 year later, he's banking $2 million a quarter in a fresh business in Southeast Asia. Now that's clearly an outlier, and earning that kind of money in the nation he's in has other problems (like warlords, crime bosses, and revolutions where they burn everything you own). I also imagine he doesn't treat his workers that well. But at least he has workers. Surely there is some middle ground between no law, and laws that so utterly crush the entrepreneurial spirit that our best and brightest simply stop hiring?
We saw this in 2008, as businesses shed millions of workers in preparation for belt-tightening. What happened to the small businesses? Many laid off every worker and focused on a smaller, but more profitable book of business. What they found should terrify us. They found they could make more money working less hours, and without the hassle of employment.
Today, I know many, many talented people who have multiple streams of income from consulting to small websites, but who employ only a part-time accountant. They're happier, make more than they ever did, and while they have a tinge of guilt for their past employees, don't see a reason to risk their comfortable lives. The problem, of course, is that this leaves a lot of people without jobs, and creates a class of people who have been taught by experience that there is no gratitude from the community for being employers. When you complain that corporations and businessmen are all evil and greedy, it should come as no surprise that people stop putting themselves inside those targets.
When small businesses get tax breaks for selling out early (capital gains), but are penalized with legal compliance and workplace restrictions for staying in the game, what do you think you are going to get?
I want to stress that this is not just a federal government problem. State and local paperwork play a role as well. It's not that this paperwork is all worthless, it's that there is too much to do, and too much risk, and ultimately, too many barriers. A worker protected from all risks will always, always end as an unemployed worker.
We don't need investment. Or coaching. Or targeted tax cuts. Or even capital gains cuts What we need is a smaller system that punishes bad actors, tort reform that works, and a renewed commitment to lifting up the good business owners as the backbone of the country.
What we truly need is for all levels of government to shrink back into their constitutionally-prescribed roles, and let Americans achieve again.
Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.
This is known as “bad luck.”
— Robert Heinlein