The Government’s War on Small Business

For huge corporations who want to control markets, small business is bad news. The last thing that corporate giants need are small, local businesses driving a free market and competition. What is bad for a corporatocracy is also bad for government as high-dollar corporate interests are what feeds the state apparatus. Whether politicians and bureaucrats hope to win generous campaign contributions and maintain power decade after decade, or they covet lucrative board and C-suite positions in big business when they retire from public office, it is in the best interest of politicians to take good care of the corporate goose that lays the golden eggs.

The crushing of small business by big government is nothing new. Decades of legislation has placed obstacles in the way of private entrepreneurship. Local zoning laws, generous tax incentives offered exclusively to large corporate entities, mountains of red tape, and restrictive licensing practices all serve to foster an environment of difficult, if not insurmountable, barriers for the individual wishing to enjoy the independence of business ownership.

Although these practices served to make it more and more difficult to be an independent business owner, the heavy-handed government treatment of small business that began under Coronavirus emergency orders, is making it close to impossible.

How Government Reaction to the Pandemic Has Destroyed Small Business

The first punishing blow fell when businesses deemed non-essential were ordered to close. For shops in some states, it was for a couple of weeks. For businesses in others, it meant months of no income. Deeming businesses essential and non-essential fell to the Department of Homeland Security, seemingly at random. A big-box home improvement center or fast-food chain might be allowed to remain open while a mom-and-pop hardware store or restaurant had to close. An art-supply store or nursery might have to close its doors, leaving a large-scale department store with an arts-and-crafts department and garden center to reap the benefits of those purchases which might ordinarily be made elsewhere. Online retail giants benefited most, with exponential growth. The people’s spending was forcibly channeled toward the largest businesses, with the best lobbyists.

When businesses finally did begin to reopen they were often subjected to costly, and sometimes arbitrary, rules such as requirements that slashed the customer capacity and operating hours of stores and restaurants and implementation of measures such as plexiglass shields and directional arrows. The shutdowns triggered supply-chain issues which continue to deprive many businesses of needed supplies and merchandise.

The government response to the hardships that it caused was a pork-filled, multi-trillion-dollar spending package with a portion set aside for business loans. Although there are some circumstances in which loans are forgivable, the general nature of a loan is that it is to be paid back, and many small businesses were already operating with narrow profit margins. Add to this the inevitable inflation brought about through such a drastic increase in the money supply, these initiatives in no way compensated for the economic devastation caused by the lockdowns.

Phase two of the war on small business came in the form of extended unemployment benefits. Bonuses added to the standard unemployment payout created a perverse incentive for employees to stay at home. In some cases, recipients would actually lose money by going to work. The impact was most evident in restaurants, which were unable to accommodate the large number of customers eager to spend the generous benefits that they were receiving. Many short-staffed establishments were again forced to reduce capacity and operating hours this time due to an inability to hire enough help. Although these extended benefits will draw to a close in upcoming months, this is of little consolation to many seasonal businesses which will be entering their off-peak season.

While the impact on service-related industries is apparent, what is not so readily apparent are the shortages within the manufacturing sector. These deficiencies, coupled with increased demand for products that was created by the artificial stimulus, are creating supply chain disruptions which will inevitably harm both small businesses and consumers.

Proposed Legislation Will Make Things Even Worse

The powers-that-be are not finished wreaking havoc on those who wish to support themselves outside of corporate America. A proliferation of other freedom-crushing measures are on the horizon including H.R. 842, also known as The PRO Act. Under the auspices of protecting the American worker from predatory employment conditions, this legislation includes a provision to eliminate contract employment. Similar to California Assembly Bill 5, which created economic hardships for both citizens and businesses in the state, this bill threatens the livelihood of all manner of self-employed people.

On the surface, The PRO Act claims to protect workers from companies that primarily use contract labor like Uber and DoorDash by requiring them to be reclassified as employees entitled to benefits. In practice, it simply eliminates jobs and robs individuals of the flexibility that they might not otherwise have as a permanent wage-earner. Publications that pay journalists and writers for articles, bands that hire contract musicians, and trucking companies that hire independent rigs will realize increased costs and those self-employed contractors will often make less money than they did independently. In California, these hardships drove a rush of industries to apply for exemptions, setting up a scenario which favors the well-connected.

How Have Businesses Fought Back?

What is the answer for a struggling business that is facing this overwhelming opposition? For some, it has been to simply evade it. There have been ongoing attempts to do this over the years in many ways such as paying employees under the table and operating without legal licensing. Underground “restaurants” have been a trend over the past few years in major cities, for example, where a membership buys one a chef-prepared meal served in a private home. In more recent times, businesses have simply refused to close or otherwise comply with mandates implemented during the pandemic. Such was the case of Shelley Luther, the Dallas salon owner who served jail time for refusing to apologize to elected officials for opening her business in defiance of a mandated lockdown.

There has also been a political approach which would seek to influence legislation more favorable to small business ventures. While there is occasional progress in this area, such as the easing of restrictions on cottage food businesses in Alabama, the power and influence of corporate interests prevents these improvements on a broader scale.

A Plan for Moving Forward

A more effective approach might be to leverage the power of small businesses by having them come together in a concerted effort. It is easy to arrest a business owner and close down their establishment if there is only one. It is far more difficult to do this if there is widespread non-compliance. It is an overwhelming feat for an entrepreneur to compete with large corporate interests in influencing legislation on an individual basis. It is much more likely to happen if that entrepreneur is part of a network of businesses acting in mutual self-interest. This is evident in the case of the revised Alabama cottage food law, which was brought about through influence from the libertarian organization Institute for Justice.

Individual efforts to carve out freedom in an unfree world are the bedrock that keeps the world from being completely subjugated by government power. How much freer would the world be if those individual efforts were focused in strategic ways?

With this goal in mind, The Libertarian Party of Georgia is spearheading the development of a state-wide Small Business Caucus. We encourage all freedom-minded business owners to join us in our efforts to preserve the spirit of liberty and individualism that comes from the ability to independently earn a living.

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