How to Keep Small Business Open For Business

Part of the reason that I wholeheartedly believe that Barack Obama will go down in history as one of the most important presidents in United States history–please note that I did not say “one of the greatest”–is because of the popular sea change in the American political landscape directly fomented by his politics and policies.

While it could be argued that the policies seen during the latter half of George W. Bush’s second term, during which time the former president admittedly abandoned free market principles, had the same effect on a macro level, but for the manifestation of broad-scope progressivism overseen by President Obama, the Tea Party and the various organic small-government groups may never have come to pass.

This evening, I had the pleasure of attending a meeting of the Lowcountry 9/12 Project in a common meeting room at a Methodist church in Summerville, South Carolina.  On the agenda tonight was a panel discussion featuring area small business owners, moderated by WTMA-AM radio talk show host Richard Todd.

The small business owners in attendance included the following: Louis Caputo, CEO of Summerville Medical Center in Summerville, South Carolina; Jack Tupper, owner of Tupperway Tires & Service in Ladson, South Carolina; Chris Bauer, owner of the deliciously excellent Sweetwater Cafe, with its three locations in Summerville, Charleston and James Island, South Carolina; and George Tupper, a longtime local realtor and builder.

On my way to the meeting, between work and the Methodist church, I spoke with a close friend of mine who is a commercial banker for a large regional bank.  (This is the same close friend who will hopefully be weighing in, over the next few days, on the Dodd-Frank bill and the additional fees recently added by Bank of America.)  He and I have spoken extensively recently on the needs and wants of small business from his perspective, and his instructions to me were clear:

“If you can, ask each one of those small business owners the same question,” he said.  “Ask them, point blank, what it’s going to take for them to grow their business.  From everyone I talk to, the answer is the same — certainty.”

I didn’t even have to ask.  Richard Todd did so for me, asking each of the panelists what the government could do, or not do, to make their respective businesses better.

Summerville Medical’s Lou Caputo was the first to speak.  “It’s a complex answer, really,” he said. “It has to do with the alignment of incentives.  I don’t know of an industry more highly regulated than health care, and the incentives for each component are very different.”

When the way that doctors are incentivized and the way that hospitals are incentivized and the way consumers are incentivized are so different, he said, effectively providing care is made more difficult.  The way I heard it, Mr. Caputo’s answer was a roundabout way to suggest that increased interference in the business of health care at those various levels–physicians, providers and patients–leads to ineffective care, and while ineffective care certainly does not always translate into poor care, both the patients and the business of health care demands that we do better.

Chris Bauer, owner of Sweetwater Cafe and purveyor of phenomenal southern fare, said things a little bit differently.  He started by acknowledging that the restaurant business is not as complicated as the health care industry, but noted that he is just as susceptible to the power and pitfalls of government intervention.

“Take the ethanol issue for example,” Bauer said.  “The government’s desire to force the use of corn for fuel has affected my costs.”

The same 25-pound bag of grits, for example, that cost only about $13 a few years ago costs about $28 now, Bauer said.  Furthermore, the down economy and growing uncertainty has affected his payroll.  While he still maintains 55 employees spread between his three restaurant locations, Bauer noted that he and his wife have cut back on salaried managers, saving him tens of thousands of dollars each year in payroll costs. That extra salary, of course, would have served as economic stimulus for the local area — that salary needed to be spent somewhere, whether it was on groceries, on gasoline, or on meals at other Lowcountry restaurants.  Mr. Bauer being forced to cut back payroll has essentially taken tens of thousands of dollars out of the local economy.

George Tupper, the longtime Summerville-area realtor and builder, said that his industry–and, frankly, the economy at large–will start to improve when “folks are able to shake the jitters.”

“So many times, doing construction and real estate, I’ve had the chance to see a couple’s happy face when they sit down in their new home for the very first time,” George Tupper said.  “Now, however, there is a whole lot of skepticism, and that’s one of the biggest factors causing the slowdown.  Look around — nobody here in this room does NOT have the jitters.”

“People see their neighbors house appraised and drop in value by one-third,” he said, noting that those same people don’t want to put money into their own house as a result.  This, he said, has resulted in his own subcontractors struggling, and the proliferation of a chain of unfortunate events .  “These are people who can’t buy food for their families, and in turn that affects the grocery stores.  It’s a domino effect, and we need to find a way to reverse that domino effect.”

Doing so requires stability, George Tupper said.  And stability, he continues, requires that we must “bring our government back home.”  We need to govern ourselves, he said — only then, can we foster the stability needed to get our economy moving again in the right direction.

The younger Tupper, of Tupperway Tires & Service, also touched upon those “jitters.”  People don’t have confidence, he said, and people don’t have money.

“While people have historically asked, as their first question, how much it is going to cost to fix their car,” he said, “the number of people who are just parking cars in their yard today–they tell me that they just don’t have the money to fix it–is staggering.”

One thing that the government could have done, the younger Tupper said, was to take the money it spent on bailing out the banks and purportedly stimulating the economy and, “instead of putting that money into the top and hoping that it trickled down, the government should have put it in the bottom and let it trickle up.”

“If they did that,” he said, looking down the panel table, “people could pay off their loans, build and buy houses, and go out to eat.”

In the meantime, however, the younger Tupper said that the patchwork attempt by President Obama–in the jobs bill just blocked by Senate Majority Leader Harry Reid–to facilitate job growth would cause more problems than it solved.  Speaking specifically of the proposed $3,500 tax break for businesses that hire someone who has been looking for work for more than six months, Tupper compared it to the unfunded mandates thrust upon the states as part of the so-called “stimulus” bill.

“How can I hire someone, tax break or not, when we don’t know what’s going to happen tomorrow?” he asked. “That tax break is nothing compared with the expenses associated with hiring someone new.”

In a word, “certainty.”  Or, if you want three words: “minimal government intervention.”

Unfortunately, the actions taken by our current president and his congressional proxies are antithetical to the very actions that must be taken in order to minimize regulatory and overall governmental interference with life and business and, in turn, provide the certainty that we so desperately need.

Thankfully, if there is a fortunate side effect in the bitter pill we have been forced to swallow, it is that the very groups that the Obama presidency has spawned–such as the great folks that make up the Lowcountry 9/12 Project–have emerged and are prepared to do their very best to observe the problems, educate others as to the solution, and do the difficult, boots-on-the-ground work necessary to make it happen.

 

 

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Comments

  1. Bob Upton says:

    Progressive politicians do not understand business or economics.
    Traditional business looks for a need that exists, fills that need and charges a market-determined fair price for what they have produced or built. Progressives strap on their rose-colored, utopian,societal engineering goggles, legislate a need that didn’t exist, regulate or hand-pick who should fill that need and then mandate a price that is beyond logic. When that fails (again and again) they throw more money and more regulations at it to make it work. Could someone pleeeease tell them it’s not working!

    I heard a story of a man who met President Obama after he had given
    a speech where he touted the value of small business in this country. The man, inspired by the President’s eloquent words, asked him how he could get one of these small businesses. The President replied, “Buy a big business and then wait.”

  2. Jordan Bell says:

    Regime Uncertainty.

    Regime uncertainty is a concept developed by Robert Higgs, that describes uncertainty of investors in their private property rights in their capital and the income it yields because of government action.

    Higgs uses this concept to explain the seriousness and prolonged duration of some economic crises, like the Great Depression or the current ‘Great Recession’.

    Investment not only entails ‘irreversibilities’ or sunk costs, but can be delayed. Investment spending may be highly sensitive to risk in various forms, including uncertainty over future tax and regulatory policy. A major cost of political and economic instability may be its depressing effect on investment.

    This uncertainty can arise from many sources, ranging from simple tax-rate increases to the imposition of new kinds of taxes to outright confiscation of private property. Threats can arise from various sorts of regulation, for instance, of securities markets, labor markets, and product markets. The security of private property rights rests not so much on the letter of the law as on the character of the government that enforces, or threatens, presumptive rights.

    http://austrianeconomics.wikia.com/wiki/Regime_uncertainty

  3. chuck harrison says:

    Jeff,

    I have owned a small business for over 30 years and the one thing that is certain…… there is no such thing as certainty. Never has been, never will be.

Trackbacks

  1. [...] what they’d do to get the economy moving again.  (I wrote about that meeting here, in “How to Keep Small Business Open for Business“)  Nearly all of the panelists described how the fundamental change that was needed was [...]

  2. [...] what they’d do to get the economy moving again.  (I wrote about that meeting here, in “How to Keep Small Business Open for Business“)  Nearly all of the panelists described how the fundamental change that was needed was [...]

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