Do progressives have a business agenda? What do we really believe about business? What policy, or policies should we support that help American business and address the abysmal situation of job creation in this country? Since this is obviously shaping up to be a Presidential election where business issues are front and center, it is critical that we have a clear understanding and positive message about business issues. This report summarizes basic conservative business principals and suggests a number of progressive business principles for discussion. The shocking number of unemployed Americans in the recent job reports, as many as 100 million by some estimates, has turned this into an emergency situation, and made it critical that we not concede the business and job creation debate to conservatives.
We know that Republicans have been trying for years to "brand" themselves as being "pro business" and they have had some success at this. Rightly or wrongly, Republicans and conservatives are often thought of as favoring “business friendly” policies, while Democrats and progressives are often thought of as favoring government friendly policies. In many ways, however, the policies favored by Republicans and conservatives are hostile to business - especially small business. It would be more accurate to say that Republicans are "pro Corporation" or "pro big business" but perception is everything and there is no guarantee that the American public sees it that way.
Conservative Business Principles
A while back, I became interested in learning whether Republicans actually had any creative or new ideas about job creation, so I politely posted this simple question on both Google+ and on Quora: “What are conserviate ideas about job creation”. This only generated a handful of responses but the ones I did get seemed to boil down to same few basic ideas, so before we explore the things that progressives think about business, we should do our best to understand what conservatives think about this issue.
It is probably an over generalization, but for the most part, conservatives and Republicans want to take a “laissez faire” approach to business, with little or no government interference in the market at all. Their business and job creation policies can be summed up as follows:
1. Tax Cuts. Conservatives love tax cuts. They even argue that businesses aren't being formed because taxes are too high. There is very little evidence for this and it is hard not to suspect that is a trojan horse - something big corporations just want regardless of whether it has anything to do with job creation or not. In reality, this is something new companies don’t care about much at all. Most startups don’t pay taxes and their primary objective is to get customers and revenue - they want profit, not tax avoidance. This was articulated particularly well in a post I read by Guy Kawaskaki, a Silicon Valley Venture Capitalist and former marketing executive at Apple - it is so concisely stated that it is worth repeating here:
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“I heard a Republican candidate say that the reason entrepreneurs aren’t starting companies is excessive regulation and corporate taxes. Come again? I’ve never met an entrepreneur say that she would start a company if it weren’t for either of these two factors. In fact, if someone said that to me, I’d respond, “Then you’re not an entrepreneur, so stay on the porch"... If you are an entrepreneur, none of this matters. You just go for it. Some things need to be believed to be seen. If you come to Silicon Valley and tell people that you can’t succeed because of regulation and taxes, be prepared to be laughed at.”
An online friend of mine put this even more succinctly. He said it was his goal to “pay a million dollars in taxes”. It doesn’t take a great deal of deep thought to understand his point.
2. Fewer Regulations. Conservatives believe that a primary obstacle to business formation and job creation is government regulation. The Small Business Administration seems to have swallowed this hook, line and sinker with their recent “reducing barriers” campaign. Naturally, it is good to get rid of harmful regulations, but this generally isn’t an huge issue to most small business in America. The SBA, by emphasizing what it doesn’t do, rather than how it can help, is in some ways playing into the hands of the conservatives and essentially absolving themselves of the responsibility of actually doing anything. Except in a few industries that really do need to be regulated, this is seldom a significant barrier to business and job creation in the United States.
3. Keep Government Out of Business. Somehow conservatives have convinced themselves that if government would just “get out of the way” everything would be great. This is of course, closely related to their "fewer regulations" principle but it is more vague and philosophical, with roots in laissez faire capitalism and libertarian philosophies. In recent years, this is often expressed as a desire for "limited government" which has become a rallying cry for them. When asked to get specific, however, things get a little more messy. Do they really want to eliminate the U.S. Department of Commerce - all of it, including the Small Business Administration? Some of them do, and the fewer Americans who benefit from the good things these agencies to, the better their case seems to be. There is also an opening here for us. You can’t rationally blame the government for the economy while at the same time argue that it should do nothing, but somehow conservatives have gotten away with this.
4. Competition and Free Enterprise. Conservatives seem to sincerely believe in competition as a way of spurring innovation, and I think we have to give them some credit for this one. For the most part, they don’t believe the government should be involved in “picking winners” and they have an unshakable faith in the “free market” - to the point where it almost approaches a dogma like religious belief.
There is a dark side to this dogma, however, it doesn’t seem to bother them all that much when powerful corporations close the door on others by erecting “barriers to entry” or engaging in anticompetitive behaviour. As is also well known, they have a “blame the victim” tendency and often look down on anyone who hasn’t made it to their station in life accusing them of “jealousy” or even “class warfare”. This is take to an extreme by the patron saint of many of them: Ayn Rand, who periodically rises from the grave to haunt American history.with her elitist philosophy that anyone who hasn’t made it in the American economic system somehow wants to mooch of the hard work of successful Americans.
5. Preserve the status quo. Conservatives generally want to preserve the status-quo of existing businesses and investors who they call "job creators". That is maybe part of their basic nature - they don't want to change things, they want to "preserve" them. This has led to a strong bias in favor of large corporations and big business. Somewhat cynically, but with a growing body of evidence, conservative politicians want to preserve the status quo simply because that is the source of their campaign contributions. In Willie Sutton terms, “that is where the money is”. Sadly, this disease seems to have affected many Democrats as well.
6. Blur the distinction between small and big business. More of a strategy than a principal, this is perhaps the most nefarious. Conservatives and Republicans love to pretend that there is no real difference between small companies and large corporations. They are both, after all, businesses, it is just a matter of size. This is their "motherhood" principal - they are "pro business" and anyone who anyone who questions this is some left wing radical who wants to get handouts from the government or freeload off their hard earned dollars. In truth, small companies and large corporations are fundamentally different in almost every respect. Conservatives seem to have some romantic, ideal of a “small business” - I always imagined this mythical business being a manufacturing plant with 40 or 50 workers. A company like that is actually quite large - just not in the same monolithic league as the modern corporations.
This, last "principle", more than anything, has done a huge amount of damage to small business in America. It has kept the government from treating us fairly, or giving us anywhere near the benefits afforded to large corporations and government workers. This is in spite of the fact the small companies - including those with no employees, now represent a massive demographic - as many as 40 or 50 million by some counts, yet incredibly, they are almost completely "off the radar". Worse, in many ways they are "out of the system" - ignored by both political parties, and struggling just to survive.
Progressive Business Principles
Conservative principles with regards to business, as wrong headed as they are, are at least stated principles. What are progressive principles when it comes to business? Do we even have any? I think we do, but like many progressive principals, they don't easily fit on a bumper sticker, or a tweet - or even make particularly good talking points. We don't have the equivalent of "limited government" or "tax cuts" - pithy statements that seem to appeal to people who don't think too deeply below the surface on policy issues.
When progressives try to express their business principles, they often revert to talking about government, not business - for example when they make completely reasonable calls for regulation of the financial sector or work to reform the failed health care insurance market. The problem with this is that it comes across as negative - not that different than when conservatives talk about "keeping government out of business". That give us an opening though. Do Americans really want government to sit around on its ass and do nothing for business? Do they really want the massive number of Americans who are "out of the system" to stay that way forever?.
It is highly unlikely that we will come to anything approaching a consensus on what our business principles are but we need to at least broach the issue. I have identified these five principles as a starting point for discussion on this issue. Your list might be different- it may be longer, or shorter - or you may disagree with some of these or articulate them differently. The important thing is that progressives become comfortable talking about this - it will be the deciding issue in the coming election.
1. Equal Opportunity. This has always been a bedrock American value - not just a progressive one, but somehow we have lost our way. Conservatives often make the ridiculous argument that we want "equal outcomes" but I have never in my life heard anyone who actually believes that. What progressives really do believe, and should believe, is in “equal opportunity” - that everyone should have a fair shake and as a society we should strive to maximize opportunities and social mobility. When conservatives talk about an “opportunity society” they are stealing progressives best business issue, and we shouldn’t let them get away with it.
2. Fairness and Inclusiveness. A business has every right to make associations or form systems that are exclusionary as long as they don’t discriminate on things like race, ethnicity or gender. The government, on the other hand, should at least try to develop system that are “non-exclusionary” - that strive to create “the greatest good for the greatest number”. To the extent possible, programs designed for business development should be open to everybody and no one should be allowed to game the system. In policy terms, we should try to create “a level playing field” that gives small business the same benefits afforded to corporations and government employees.
3. Collaboration and Cooperation. The flip side of the conservative value of business “competition” is that of business “cooperation”. There is no doubt that competition helps drive innovation, but at times competition can also be wasteful and destructive. Much can also be accomplished by cooperation, sometimes in the form of non-traditional organizations. This can include public-private partnerships, regional technology clusters, small business incubators, entrepreneurial training programs.and business cooperatives. We should never stop experimenting in this area. If we don’t learn better ways of cooperating and collaborating, our international competitor certainly will.
4. Small Business Exceptionalism. This may be the most important progressive business principle, and one that I believe should be promoted and defended. Small Businesses are simply not just “tiny big businesses” - they are a fundamentally different in almost every respect. While is seems to have been forgotten, every single major corporation was once just an idea in the head of one or maybe two business founders. That is the true source of job creation, and we need to learn how to nurture and grow these businesses at this extremely early stage, for they are the major corporations of tomorrow.
5. Sustainability and Social Responsibility. Capitalism is wonderful for spurring inventiveness and providing motivation, but it doesn't always get the "cost" side of the equation right. Chop down a forest and sell all the wood and you might make a nice profit, but you may have harmed the earth and taken from future generations, so the true cost of that business is more than just the tools and effort. Buy a distressed company, fire all the workers and sell the technology to China, and you may indeed make a handsome profit - but did you help your country? Business should be encouraged to be socially responsible and to have environmentally sustainable practices. They should hire disadvantaged and handicapped employees, and invest in employees training, and become involved in their local communities. Yes, their primary responsibility is to make a profit so they can continue operations, but they should also give back to the country that gave them the opportunity.
An Emergency Situation
The nation’s unemployment numbers came out last week, and they were beyond horrible. One hundred million Americans don’t have jobs. This number is so big that it boggles the mind, and if it doesn't it should. The "shrinking workforce" issue is just now finally getting some attention, and in my opinion it is long overdue. It could be that looking by looking at “jobs” and the “unemployment rate” we are blinding ourselves to an underlying reality of what is really going on in America today.
Sometimes people in this category are described as "people who have given up looking for work". Some conservative-leaning people love to sneer at this implying that these Americans are lazy bums who should just get their ass in gear and work harder to get a job. At a certain point, however, people are coming to the completely rational conclusion that looking for jobs in this economy is a waste of time. Corporations don’t want anyone who is too old, or is too young, or doesn’t have the exactly right skill set, and many now have an unstated “unemployed need not apply” policy. Corporations have made it clear they don't need us, and don't want us.
These Americans aren’t lazy, they aren’t bums, and they haven’t given up on life. They have just given up on a system that no longer wants them. Many, many of them have started small businesses of some kind, or are trying to. This is a huge chunk of America now. Ignoring them is not only foolish, it is dangerous. This is approaching the number where social disruptions occur and societies collapse. One way or another, we have to find a way to make the system work for them - or design a new system that does. We can’t be playing games anymore. This is an emergency situation.
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Rob Gordon is a small business owner and freelance consultant living in San Diego California, and has several ventures related to business and social networking technologies. His most recent project is “American Startups” - a project that was inspired by, and later became a reaction to, the exclusionary Obama administration “Startup America” program. Readers of this post are invited to participate in the beta test for this new community at American-Startups