Diary

Anti-business Policies and the Liberty of Risk

Ben Casselman penned a piece a year ago in the Wall Street Journal, which documented the decline of risk-taking in business ventures. Hard data showed that both the number of new companies and the use of venture capital is waning. He rightfully suggested that this downward trend is a major contributor to the fact that the recovery from the recent recession is so painfully slow and anemic.

Casselman went on to explain that economists aren’t entirely sure what is behind the decline and gave some potential causes: health care costs, licensing requirements, an aging population, and an increase in large corporations are among some of the suggestions. While these factors do contribute, Casselman missed the glaring elephant in the room: the government, and her anti-business policies, do more to stifle free business activity than any other than any other single mitigating circumstance. Looking at the article a year later, the situation has continued to decline. Here’s how.

This administration has been exceedingly heavy-handed in its efforts to demonize businesses, while promising that businesses will be highly taxed and regulated. Whether it is labor regulation by the NRLB or environmental regulation by the EPA, government interference has been overreaching and restrictive.

Additionally, there have been huge increases in both criminal rules and regulations about what businesses are allowed and not allowed to do — from nitpicky labor rules, to dictating employee minutiae, to minimum wage requirements, all which restrict business hiring — and even employee firing. The EEOC has joined in with several lawsuits against private businesses, deemed by one judge as “laughable”, “based on unreliable data”, and “rife with analytical error”.

More unfortunately, Obama has provided the background for a litigation-friendly environment. If a larger, more financially stable company wants to steal something from a smaller company, they can sue them or just threaten with a costly legal battle. Or, if labor doesn’t like them, they can force them to shut them down as an alternative to litigation. What’s worse, Obama’s Labor Secretary pick, Thomas Perez, particularly favors the use of “disparate impact” theory with business labor disputes, because, as NRO noted, it “sets a very low bar for proving discrimination. Under it, prosecutors need not prove intent, merely that minorities have suffered a disparate impact from some action”.

More recently, the Obama Administration has decided to wage war on business inversions, by declaring companies who wish to move their headquarters abroad to be “unpatriotic”, and “tax dodgers”. Instead of fixing the root problem — which is that the United States is the only major nation to tax American companies on foreign profits as well as domestic — he instead suddenly tightens the rules for companies and calls the perfectly legal process of inversion to be a “loophole”. Couple that with the fact that we have the highest corporate tax rate in the world, and its no wonder that the United States recently ranked 32 out of 34 countries in the new “International Tax Competitiveness Index”.

Of course, there will be some successes. It just now takes a higher level of skill, ideas, and money to exercise your entrepreneurial spirit. It’s not like there won’t be the Jeffrey Bezos or the Bill Gates or the Steve Jobs. They’ll still come through everything despite the immense impediments. The problem is that it is the middle entrepreneurs who are having a hard time getting started, and even when they do, they will likely get discouraged in the mess. Yet it is precisely this middle group, the bread-and-butter of small businesses, that have made this country great. That future is threatened, as we are seeing now in subtle shifts within the realm of business making.

The future of this country will continue to decline if the anti-business sentiment that Obama has unleashed is allowed to continue. The middle entrepreneurs, the mom-and-pops, the family businesses are the ones that make up the difference between the very tepid growth that we are seeing and the strong growth and recovery that could be better if businesses actually had better opportunity.

Businesses go into business not to comply with government dictates, but to provide a product, a service, to make things. The very liberty for Americans to have the opportunity to succeed and fail, to take risk, to survive, and to thrive is under siege.