The persistent mythology of Libertarians is that a free market, with no manipulations by and for the democracy, represents the greatest path to economic freedom. The notion is championed by the U.S. Chamber of Commerce and most of its local branches, and is a major source of traction for conservative politicians with small, local entrepreneurs. It is a myth based in the selective ignorance of history, both in economic terms as well as business, that is the calling card of today’s conservatives. The realities of the market start with the fact that all business relies on the commercial infrastructure that can only be supported through progressive taxation.
Unregulated capitalism is exactly what it is commonly billed as; survival of the fittest. In a pure capitalist society, winners in each major area of business will steadily acquire market capital until they become monopolies. We can see this phenomenon already in many industries; as business gets ever larger, the winners are able to leverage economies of scale to lower their own cost of goods sold, and are able to leverage their status as job creators to blackmail local governments into lower participation in infrastructure funding.
The striking irony of the situation is how visible the problem is in Red State America without any apparent backlash against the idea. For the last 30 years, Walmart has been a principal beneficiary of big firm welfare at the local, state, and federal level. Its property tax payments are far lower as a percentage of operation than any local business, virtually guaranteeing that it uses far more of the infrastructure provided by government than it pays for. Its relentless operations in Red State America have destroyed thousands of small town squares, along with the entrepreneurial aspirations and steady incomes of the former store front owners in those towns.
The world’s largest retailer is not, in my opinion, an evil enterprise. Walmart is only doing what a smart enterprise should do; operate in the most successful model that the law allows. But the question needs to be asked; should laws and tax codes be tailored to the success of very large enterprise, or should they be built around local business needs? The notions commonly thought of as supply side economics have stayed clear of any dividing lines in business; to the members of the Austrian School of economics, business is business. But large enterprise has the capacity and motive to be transient; they can move their assets from state to state, and from country to country, using arbitrage to earn greater and greater returns on their investment.
In plainer language, lowering tax and regulatory burdens on large enterprise does not translate into higher standards of living for working class Americans. Every American is aware, on a daily basis, of the proof for this argument; outsourcing jobs and cash is the common refrain for large publicly-traded U.S. companies. This is why the three decade orgy of federal tax cuts, cash policies, and regulatory blindness has not led to growth in the potential of the American working class. None of these steps has helped local business operators, or those seeking to join the ranks of the entrepreneurial class, to succeed in their endeavors. All this has done for most local business is taken the focus off of the top-line management of their firms (Sales and COGS), and placed it wrongly on the expense and tax lines.
Small, local businesses create jobs that don’t leave a community. Small, local businesses spend their revenues inside the community. Small, local businesses need the commercial infrastructure that only a sensibly crafted progressive tax structure can provide; educated workers and consumers, good roads and utility infrastructure, and quality police and fire protection. The orgy of tax-cutting started by Saint Ronnie the Gipper at the federal level, has only served to push greater burdens onto local government, and local government is inevitably forced to slash the services on which small business relies.
Our democratic narrative has been so distorted that small business owners even came out in full force against the artist known as ObamaCare; an act that would make it easier for perspective business owners to find the affordable insurance necessary to take the risk of business ownership. As it stands, many entrepreneurs are only able to make half a stand; with either themselves or their spouse maintaining a job with one of the privileged big businesses to keep their family covered. As we move further into Campaign 2012, we will hear more and more from the supposedly pro-business camp of Mitt Romney. The question that needs to be answered is what business is he “pro” for? The Rational Middle advocates for liberal solutions that build thriving local business communities, and against big-business welfare of the type that Norquist, Romney, et. al. have championed for so long.
For a strong America, we need our town squares back; we need the little guy to have a better chance than the corporate suits.
The Rational Middle is listening….