Support for new small businesses will encourage innovation and fight inequality, and help Democrats win in 2016.
(Originally published on DailyCollegian.com)
As Matt Yglesias at Vox noted in December, Barack Obama has been the most successful president since Lyndon Johnson. He passed huge new legislation that has helped to control health care costs, a problematically large percentage of our economy, while insuring a near-record percentage of Americans.
But with the media focusing the public gaze on scandal and image, they barely noticed student loan reform, military reform, the greatest pro-environmental record of any president, the most diverse executive cabinet and staff of all time or the record number of judicial appointments. Not to mention the increase in Democrat-nominated majorities on the 13 U.S. Appeals Courts from one to nine or the executive action on the large number of undocumented persons languishing in the nation’s shadows.
This status gives him immense power over the next two years. Republicans, still playing from a weakened position and having internal discord both at party headquarters and now on two sides of the U.S. Capitol, will only play into Obama’s political hand, allowing him to box them in on every issue, no longer having to kowtow to a third power center in Harry Reid.
Now it’s Obama vs. Republicans.
The Democrats in the minority are far more united, allowed by GOP gerrymandering in the House, the Blue Dog evisceration of 2014 and a strong 2016 Senate map to consolidate into a more liberal faction without facing the splintering that the GOP has faced when moving more rightward.
Economic numbers for the average citizen are not promising. In 25 years, national GDP has gone up 83 percent. Profits have doubled as a percentage of the economy and worker productivity has doubled. So what have workers seen in return for a generation of corporate profits? The median wage is down in 81 percent of U.S. counties over the past 15 years.
Democrats across the country can rally around a message that corporations have too much power. Unfair competition hurts small businesses around the country, as we’ve seen with Walmart decimating the mom-and-pop shop industry. On average, people work more hours and make less money, and profits are still on the rise.
Unjust practices on Wall Street caused homelessness, unemployment and poverty, and yet no one is in jail and they have insiders in Congress, like Trey Gowdy, and the Treasury Department, where ‘Goldman Sachs’ on a resume seems to be an employment guarantee. Banks are still risking public and private retirement money on stock market gambles.
Streamlining regulation for small businesses means taking thousands of outdated regulations off of the books, but not making it easier for big corporations to gobble up competitors and use market share and power to outcompete everyone else. That’s bad for innovation. It’s also anti-capitalist, even in purely neo-classical theory.
Small businesses, particularly newly founded ones, drive American success. Recent research into small businesses shows that firms less than one year old offered almost all new jobs over the last 30 years, as Derek Khanna discussed in a May 2014 “American Conservative” article. The data show that “existing businesses,” more than one year old, lost about one million jobs per year, while new businesses added three million jobs per year. Clearly, continuing down the path of corporate consolidation won’t be the key to boosting job prospects or raising incomes.
The biggest barrier to wage and job growth in the U.S. is not the federal government, which has seen a drastic shift in regulatory policy as American politics have moved rightward, but the growth of corporations and big business through consolidation. As large corporations gained more influence in the 1980s and 1990s, they attacked campaign finance laws, further opening the political avenues for increasing the return on lobbying while reducing the return on investment.
The public nature of profit endangers America’s economy. Corporate leaders now need the best lobbyists and the best workers, the best government relations team and the best R&D team. That hampers innovation. Small businesses, where all job growth comes from, cannot hire a lobbyist. The next Apple in a Los Altos, California garage cannot partner with a government relations firm.
Khanna calls these issues to attention for Republicans for an obvious reason: they would be incredibly popular. But getting the anti-government activists, of whom the GOP establishment is very afraid, on-board may be impossible. Regulating the economy for innovation is not libertarianism. Creating an economy that supports small businesses is not in the interests of the major party corporate backers.
But the GOP establishment and message machine is far more intertwined with corporations than the Democratic Party. And Republicans have not had a truly pseudo-populist message since the 1994 Contract with America, while Democrats often only win as candidates of the people, like Obama and Bill Clinton.
Democratic candidates, activists and voters can campaign for rolling back the corporate takeover of America, an American deal that returns economic power to small businesses, cuts regulations, reinforces retirement and shows the people that government can be used as an instrument of good.
Khanna talks about making the GOP the party of innovation. I think the Democrats need to get there first, and realize that a people’s contract making the business environment fairer and more competitive is good for wages, innovation, civic responsibility and respect for government and its service of the public good.
Using the congressional minority to work with an empowered Obama to create a real Democratic message for 2016 that Elizabeth Warren or Hillary Clinton could rally around? That’s the lesson of 2014.