Posted on Mon, Nov. 15, 2004


Small businesses a mystery to Washington


Guest columnist

What is so special about the small-business man?

Politicians love to talk about small-business men; they hug them to their breasts and are eager to help them. As an ancient former small-business man, my reaction to all this is to say: “Please don’t. You have helped us enough. Stop! Leave us alone to do our thing.”

Few presidents know anything about us. This is especially true of Democrats, of whom it has been said, “They love employees; it’s the employers they can’t stand.”

In the United States, there are roughly 14 million small businesses, as defined by the Small Business Administration. In South Carolina, there are 79,321 small businesses with up to 500 employees and a startling 189,000 self-employed people (no employees); these two groups combine to be a giant engine in our economy.

Nationally, hundreds of them went out of business yesterday, and hundreds started up today. No one has more incentive to succeed than an owner. As a person who spent most of his life working in big business and then 11 years owning and running two small enterprises, I might be uniquely able to help explain what small-business owners want, and why they are so important.

I started the first business in 1975, added another and sold both advantageously in 1986. At any given time, they had 70 employees, including the fine man who managed them for me. One was a national hamburger franchise with the initials BK, the other a sit-down seafood restaurant.

We calculated that during the 11 years, we had more than 5,000 employees. Even the best of them come and go with the school year and seasons. We always paid more than the minimum and rewarded those with tenure with small but steady raises.

It’s hard to exaggerate the impact on a community of each locally owned, healthy enterprise. Because of my fondness for statistics, we kept track of how many automobiles our employees bought. It totaled at least 325, divided among the auto dealers in a small town. Think of the groceries my young people bought, the clothes, the TVs! Think of the sales and other taxes they paid.

When presidential candidates bloviate about the jobs they’re going to create if elected, they’re blowing smoke. Presidents only create government jobs. All government at all levels can do is create a climate of benevolence. If each small-business person hired just one more employee — just one — they’d scoop up most unemployed and help solve racial tensions. Think — 14 million new jobs, many more sophisticated than in my little eateries.

The small-business person is a total mystery in Washington. Only in the Far East do some governments leave him unfettered to do his thing. Here, government hinders his freedom to hire, fire, discipline, sometimes even to reward. He’s at risk of being sued at every step, and even if he prevails in court, it can still cost tens of thousands of dollars. Government doesn’t need to train him: He could teach government. As Lord Keynes would say, “Government suppresses his animal spirits.”

Jimmy Cash Penney went from one store to 1,680; Sam Walton from one to 5,000 and counting. Individually, he or she is unimportant in the vast scheme of things. If he fails, he can sink without a trace. Often he pays his business taxes as an individual, which can make him seem rich — sometimes rich for just one year. He thinks government help comes with a curse.

He strives for simplification and doesn’t welcome complexity — tax schemes with wild swings, that stop and start; weird workers’ compensation; constantly escalating health and other add-ons that make it impossible to give raises to especially deserving employees.

In Europe, with its devotion to socialism, the successful people live in genteel poverty and the others in abject poverty. Some of those in big government (as George Gilder says) “want capitalism without capital gains, wealth without the rich and an investment boom led by Democrats.”

The small-business man believes his job is to take risks and government’s is to be predictable. Millions of small-business people making tens of thousands of decisions each day constitute a mighty engine for healthy growth. Their wants are simple. They want (and must earn) loyal, happy, effective employees no matter the sex, race or other complexities. They want peace so they can get on with what they do best — grow and serve. They are, at their best, free spirits. Government officials can hurt, but are limited in their ability to help.

Mr. Cunningham lives in Orangeburg and has been president and CEO of five corporations.





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