Let’s Go Into Business

I want to be your partner. Here’s the deal.

You put up all the capital and I put in nothing. You provide all the labor and I provide nothing. I will tell you the minimum wage you can pay your employees. From the wages they earn, I will collect a percentage.moneylink

You will have to comply with the edicts I make on all aspects of our business from 1) the types of products you can sell; 2) the materials that are to be used and, 3) how to dispose of the waste.  I have laws and regulations that you will need to follow covering everything from plumbing to lighting and more.

Every year you will pay me a percentage of your sales regardless of whether you make money or not. If you don’t pay me I will fine you and, if necessary have the authority to imprison you. From time to time, I have the right to raise or lower the amount you have to pay me.

Should you leave or sell the business, I automatically become the partner to whomever you sell the business. If we are successful and sell the business at a profit, I will charge you a fee (call it a capital gain fee) on the price of the sale. Sound fair? Ready to deal? If you already own a business you know who I am.

I’m Uncle Sam.

Sound ludicrous, doesn’t it? And people wonder why we have close to 100 million people out of the labor force.

Bernie Sanders is leading the charge to solve this malaise by offering more “free stuff.”  How does he plan to get and pay for it all? He’s telling you the answer in advance: from his business partners, of course, who are going to be less than delighted to fork even more of their money to their partner (a/k/a the Federal Government by way of the IRS).

The fact is that neither candidate on the Democrat Party sounds as if he/she truly understands how business works; therefore, they continue to ask for more and more money from private business owners.

Currently,  the U.S. has the highest corporate tax rate in the world. Because of this, the largest and smartest companies shield their revenues and assets from the U.S government by creating offshore entities. They then book their revenues through these stand alone enterprises. Such  maneuvering shields them from having to pay U.S. taxes. So, the tax burden then gets shouldered by smaller and smaller enterprises who are unable to get the same treatment, or concoct the same schemes with government acquiescence, that larger companies can.

It is easy for a multinational corporation such as Google to move much of its revenues off shore since much of their transactions are global. But the local restaurant, whose customers are within a 100 mile radius of their location, are unable to do the same. The IRS would never allow a local entity to park its assets offshore.

So, the freebies that Bernie Sanders plans to give away will come from this already overburdened business class.

It is easy to see by the demands and promises that Bernie Sanders is making that he has no real understanding of, or connection to, the business community and the Herculean efforts small business owners make to succeed at their ventures. This disconnect between big government and the small business owner, and the adverse effects it has on the nation as a whole, can be understood by an example within the medical field.

When I was younger and played sports, I had many injuries that required extensive physical therapy. I had several shoulder injuries as a result of many years on Aikido mats. This happened because when I threw my opponents to the ground, I failed to connect my torso to my shoulders. As a result, my shoulder would become stressed. Instead of moving in unison with my torso, the shoulder moved separately and bore the entire stress.

When I then needed physical therapy, I encountered physically healthy people who had been recommended to physical therapy by their mental health practitioners. They were directed to physical therapy in order to connect the body back with the mind. Most of these were white collar professionals who had long stopped using their body properly and suffered mental issues. The physical therapy was a way to connect the body back with the mind.

This whole notion of working the (literal and figurative) body and mind together for matters of wellness and wholeness applies to everything we do…from physical injury to business to politics: the same principles apply.

The Democrat candidates for President are promising more free stuff without any idea of who pays for it. This disconnect is causing turmoil and sickness to the body politic. Over the last few weeks, there has been increasing aggression at political events and agitation by the citizenry over fear and confusion for the country’s political and economic future. The business class is upset due to its declining margins as well as the demands of the political class for more and more money. Instead of working together to grow a larger economy where all can benefit, business owners know that the proposals from Bernie Sanders and Hillary Clinton will, to the contrary, kill their businesses once and for all.

Bernie Sanders and Hillary Clinton need more of a connection to small business owners and the realities of operating a profitable enterprise. If they had that connection, they’d never be touting more free stuff. Then again, if the didn’t tout more free stuff they’d never be the top two candidates for the Democrat Party’s nominee.

Now there’s logic and a very good reason to vote Republican… if case you need one.

Steve

sleeclark@gmail.com

 

The War on Small Business

One of my favorite TV personalities is John Stossel who has a show on Fox that highlights current consumer issues with his libertarian bent. He usually takes a look at a current issue and then breaks down how that issue is being handled by the free market and how the government is handling that issue through its regulatory arm.

In his previous life as a reporter for ABC, John Stossel would go around looking at how business owners would try to take advantage of the little guy and then do a report on the damage being wrought by this business. His main aim was to heighten a concern in the hopes that the politicians would take note and create a new law to stop this type of abuse. He has since repented of his ways, and he understands the damage he wrought by continually asking the government for new laws. He know believes that the free market will eventually regulate these endeavors and for the most part government intervention is not needed.

Small Business Owner

 

 

 

 

 

For example, one of the many cries during the financial crisis that occurred in 2008 was that the financial crisis took place was because there was not enough regulations in the financial industry. The media critics and the pundits all declared that our financial institutions had gotten so large they were deemed “Too Big To Fail” and because of that, these institutions had to be bailed out or else the whole economy would have collapsed. Subsequently, many banks were taken over, shut down and merged (Bear Stearns, Lehman Brothers, Wachovia, etc.) The result of these closings has made the existing banks bigger than ever. In addition, the banks have had to deal with a tremendous amount of new regulations. Believe it or not, the existing banks like these new regulations because they know that the smaller banks don’t have the time or the money to comply with these new laws and are then forced to get out of the business. Which in turn, has made the largest banks bigger than they were before the crisis.

The ideal situation would have been to break up all the bigger financial institutions and then lessened the regulatory burdens so that smaller institutions could have gotten into the business. It would have been a good way to disperse risk as money would have moved out of some of the major money centers and into smaller regional banks- which would have reduced some of the concentration of wealth. Instead, what we have now are super huge banks and now they really are “too big to fail”.

Maybe that was the intention of the government all along to concentrate the wealth and power in a few hands. It is easier for the government to monitor and regulate a handful of institutions than a smorgasbord of banks dispersed throughout the country. I believe the following is happening not only in banking but in all industries- the move to burden the small operator so much that they are forced to merge or sell to bigger companies or close shop altogether. In my opinion, the federal government is engaged in a deliberate scheme to force consolidation in the business sector so that it only has a handful of companies to monitor and regulate, rather than deal with the millions of small , tough minded entrepreneurs. The big business heavy regulated economy is how Europe and socialist states are run and it is the direction we are heading.

For example take a look at Obamacare. “The number of medical codes that must be used to document patients and secure payments for insurers will go from 45,000 to 160,000.”(Dan Kennedy) I would gather that the very large medical centers that have large staffs will be able to process the additional work flow at a lower costs because they can transfer the work to a greater percentage of people. The small practice will have to endure 4x the amount of work and complexity, compliance and related costs which they will not be able to pass down to their patients thus drain the compensation of the doctors and their practice. As a result of this, expect to see a wave of mergers and mega hospitals come into being. This will remove choice and retard access for people looking for medical care.

Part of the reason we have not seen the bounce back in the economy since 2008 has been the difficulties that the entrepreneur has faced and Obama’s move to consolidate the business sector. However, America has always been a resilient country and the entrepreneur has always been the backbone of this country, all we need now is a political class to empower these people and not hinder them.

Steven Clark