One huge problem we have in America is that the millions of people who are struggling to start or grow businesses, or go solo through self-employment, have no voice. The people who talk and write — the chattering classes — do that for a living. The people who live off the public teat are often talkers and writers, and thus dominate the conversation. The major business guys are in bed with the government or have a lot to lose, so they lie low. The big middle band of actual and potential self-starters and wealth-creators is inarticulate and it needs someone to speak for it, and to learn to speak for itself.
The regulatory state is structured to punish and thwart solo workers, self employment, small businesses, and start ups. The regulatory state has several missions. Expanding its power is one. Moving resources to its clients is another. Insulating its clients from possible threats — incumbent protection — is another. The very thing which will allow us to dig out of this recession is what our government is structured to prevent.
This has to change.
29 thoughts on “This has to change.”
Members of the chattering classes have generally spent 18-20 years in school, in an environment where the steps are clearly defined–meet these expectations, get that reward. They then usually go to work in institutions–universities, nonprofits, etc–and to many of them the idea of life outside an institution is as strange and exotic as the idea of becoming a Plains Indian. Many of them are also still under the influence of John Kenneth Galbraith’s idea that increasingly it will be only large institutions that really matter.
OTOH, if you walk through the downtown business district of virtually any large or mid-sized city, you’ll find that quite a few of the retail businesses are owned & run by people who are at least somewhat of the hippie persuasion. This is also true for many craft-based manufacturing businesses, although I’m sure most of them would not think of themselves as manufacturers.
AFAIK Sarah Palin is the only member of the original field of possible presidential candidates who has some understanding and/or concern about these issues.
As a micro businessman in service and sales for the last twenty-odd years I have come to feel like an outlaw of sorts. Perhaps I’m exaggerating my own feelings a bit, but I certainly believe that there is over-regulation and high fees to be paid for a small business. One is foolish to unnecessarily come to the attention of any governmental bureaucracy at any level for any reason.
outlaw™ is protein wisdom territory.
Entrepreneurs, by definition, like to do something new. They do it because they think they will benefit if it works. If it fails, they try something else.
Starting a business is creating something out of nothing. It is easy to destroy a dream because no one knows its value. But everyone can see the harm it can cause. It is impossible to defend a dream rationally because all the entrepreneur has in support of his dream is his determination to make it work.
Take away the rewards for success and the dream is aborted. Create regulations that are designed to prevent innovation, and the dream is aborted.
An economy grows be using resources more efficiently. For example, farm machinery could be invented and sold in the Midwest in the late 1800’s because there was a vast amount of land to be farmed and very, very few peasants to do the work.
Farm machinery could never have been invented and sold in the late 1800’s in Europe because thousands of peasants would lose their jobs. So the would-be inventors came to the Midwest an invented an industry that conquered famine and fed the world.
A dream was realized that everyone said was impossible because famines were unavoidable (which famines are in most economies).
Entreprenuers are people who know they are right and everybody else is wrong.
Sol…” Farm machinery could never have been invented and sold in the late 1800′s in Europe because thousands of peasants would lose their jobs”
I saw an interesting comparative analysis of the adoption of the Spinning Jenny in England, France, and India circa 1790. (A Jenny was a more productive replacement for the distaff or the spinning wheel. Although it was normally hand-powered, it still increased labor productivity by 5:1 or better.) Because of higher labor rates and lower capital costs, the Jenny was adopted much more extensively in England than in France or India.
I am at Trader Joes, a boutique grocery store and I remarked to the counter person – how many empty stores there are in the shopping center.
I think the average person is starting to get it.
Who could forget this little episode.
When it was pointed out to her that Hillarycare would likely bankrupt small businesses across America, Hillary Clinton responded “I can’t be responsible for every under-capitalized small business in America!”
These morally vacant politicians wield the crushing power of the state, irresponsibly ruining peoples’ lives like children stepping on ants.
LG…yes, I remember that Hillary Clinton comment. Of course, no one was asking her to “be responsible for” these small businesses, just to refrain from wantonly destroying them.
The distaff and spinning wheel were used by women of 1800 usually to make cloth for themselves, their family or their tribe. Women had enough duties in running their households that losing the task of making cloth was welcomed.
On the other hand, it took an entire village full of peasants (about 50 men) to farm about 600 acres. In the midwest a single farmer farms a section (640 acres) and there are farms that are 5 and 6 sections (a township).
Fifty peasant men wihout jobs or homes, replaced by one man and his farm equiment. Not acceptable.
Sol: “Fifty peasant men wihout jobs or homes, replaced by one man and his farm equiment. Not acceptable.”
Being the owner of a tiny hobby farm, I know exactly of what you speak. In a short hour or so, a local farmer cuts my hay on 15 acres. In a day or two, he comes out and bales the hay in two hours and in another hour or so it is all put up. Approximately one thousand square bales of hay, x 60 pounds = sixty thousand pounds of hay, and all the work done in less than one half of one working day. You can see why the peasants would be, as Donald Trump is fond of saying, fired.
If the local farmer is doing the large round bales or squares, it takes even less time and the hay is never touched by human hands.
It it absolutely mind boggling to me how hard people used to have to work to scratch it out.
Sol..but in most cases the 50 peasants of the village were farming land which was divided into strips (sometimes in very weird and inefficient ways) and were not raising food for the market any more than their wives were making yarn/cloth for the market, but only for family consumption and the share which had to be paid to the local feudal lord. A labor-saving device in the form of an ox or a mule was certainly very welcome to those that could afford one, and technological innovations in agriculture (improved plow, useable harness for horses) were indeed developed and adopted in the Middle Ages.
@newrouter — the link didn’t come out right. Should be
I wear a number of hats for a small investment management business, and I can tell you that increased regulations have us exploring selling out to a larger firm. The cost of compliance is becoming increasingly untenable, and I can’t imagine how a solo practitioner could hang out his/her shingle now.
Best thing is, this regulation is of absolutely no use in preventing future Madoffs or MF Globals. At best, it lays a paper trail for investigators to follow after the blowup. At best.
Even better, after all the hubbub about “too big to fail,” the resulting regulation only gives incentives for companies to get larger.
One more item: I’m a member of the Fixed Income Management group on LinkedIn. With one or two exceptions, the ONLY job openings being posted there are all compliance. Nothing to do with actually managing money.
Eliminate legal favoritism for the employer-employee arrangement. Let every worker be an independent contractor.
The American notion of secure jobs and safe retirements was the product of a bubble.
Also, it seems that independent farmers–with operations not large enough to pay for full-time security–are being undercut by the toleration of crime than has been encouraged by “progressivism.”
VDH on vandals in California
David Foster – that is a sad, sad article. I imagine a lot of the folks being shat upon are beginning to arm up, if they aren’t armed already.
There is very little of this type of activity here in rural Wisconsin that I know of, but it is an understood that pretty much every farmer is well armed and well trained on how to use the arms.
Jeez, David, that article is horrifying…
I wish my parents were still alive, so I could quiz them as to whether social behavior broke down like this in the Depression. I’m sure it did to some extent, but I also have to think that there wasn’t the increasing sense that government was actually on the side of the anarchy.
In the late 900s vikings raided down rivers into Europe. The locals responded by building fortifications and a standing army. The kings granted land to local military leaders (dux, comes) who held the land in return for a personal oath to supply a fixed number of armed men for a fixed number of days to defend the king and his realm. The armed men had horses so that they could respond quickly.
The local peasants were protected in return for food. They worked 3 days on their own land and 3 days on the lord’s. The seventh belonged to God. Peasants usually lived in small villages for safety. How the land titles were divided up varied from time to time and place to place. Sometimes the peasants had no title but they were considered to be part of the land, an appurtenance.
This arrangement continued into the 20th century. Indeed, the Russian intelligentsia still worship the mir and Hillary Clinton and Barack Obama and the American intelligentsia still worship the village.
American agriculture got a fresh start because American farmers own vast fields with rich soil that had never been plowed and never seen a farmer. There were no traditions and there was a shortage of farmers.
The labor-saving machines of american agriculture were slowly and reluctantly adopted in Europe bwfore WW2. Killing off a few million farmers in WW1 & 2 speeded up the change over.
Sol, what do you mean by “the Russian intelligentsia still worship the mir”?
mir (мир) = peace.
There is also very archaic, ancient church-Slavic old-dictionary connotation of “rural peasant communal organization”, but it hasn’t been in an active use since Count Tolstoy
The original meaning of mir was the village in which the serfs lived. Marxist-Leninist literature views the mir as the model for the ideal state because everyone in the mir worked for the common good. Everyone produced what he was able and took only what he needed – all in peace and harmony. Sadly collectivization in Russia, or China, or even Cambodia never could make this dream come true even though millions died trying bring back the mir. This dream lives today in modern western liberal thought.
There is a journal called the Novy Mir that covered these ideas in the 20s. It has fallen into the hands of counter-revolutionaries.
I apologize because I assumed there were still some russian lefties who dream of recreating the mir – perhaps Putin supporters – and “this time it will be different”*.
*a famous liberal saying.
1) take things too literally and
2) you fight a last (even the one before last) war.
Putin supporters are not ideological lefties in American sense. Where do I begin to state the differences. Just one fact that might tell you something – his party, United Russia, is unofficially called everywhere in the country the Party of Conmen and Thieves. See what happens when I type that in Google search: http://tinyurl.com/7guqfy9. What connection thieves and bandits have with leftist idealists? At best, they use idealism as camouflage, as tool for indoctrination (search-type “Наши”). Putin is not Marxist, he is not Lenin: he is a common criminal, a tough.
“Mir”, as I said, is not literally “a village”. The word has several connotations, the most used are “world” and “peace”. Yes, in Russian it is the same word. In this online dictionary the connotation you recall is not even listed – it is that archaic. Besides, even in that meaning it is not precisely “a village”. It means “communality”, a principle of social and hierarchical organization of rural peasantry. It is precisely them (peasants) not being serfs, that it stresses: it is a principle of self-governing of a primary modular unit of society. Basically, the closest analogy would be a townhall meeting of American town. All decisions are not made by one leader, but a community who decide things in an open democratic discussion and all members contribute to the well-being of community; equally or not – that is another matter. The notion stems from historical documents of 10 century – Novgorod was basically a Republic, deciding matters “на миру”, i.e. by democratic methods. That’s where it stems from, not from Marxists; Lenin did not invent the word nor its meaning.
The magazine you mention was never named after peasant village ideal. “Novy mir” simply means “New World”.
Tatyana – since you seem so knowledgeable on current Russian events do you think Putin will be defeated? He is an ex KGB Colonel and I don’t trust him. The impression I get – from what I have read – is that he has corrupted the democratic election process –
I have also found interesting – as a social phenomenon – the impact of social websites such as Facebook and Twitter have had on revolutions – particularly in the Mideast but recently in Russia.
Do you think an opportunity for the West was lost when Yeltsin took over in 1992? A mistake I read of Yeltsin’s was not dismantling the KGB when he took over.
Opportunity as defined helping them achieve a true democratic government with the ability for all its citizens to prosper – just just the few who became billionaires by hook or crook.
I never will forget a visit I had to the Moscow Circus – not a traveling circus that we think of but a smaller, more intimate venue. I was sitting in the front row and a middle age woman was looking at me – recognizing me as a tourist (not many of them went there), but the look in her face was one of hope for the future, regret for the cold war….
(or perhaps in a bit of Tatyanian interpretation you would say that I was interpreting too much ;-) )
I am not an expert nor am I that much interested in Russian politics.
I do have opinions on Russian matters, but to answer to each of your questions properly I would monopolize this thread for days to come.
So, apologies for being short.
Basically, you are right not to trust Putin and his party.
No, Americans helped Eltsin as much as they could anyway. Russians had their dissidents their underground and their intelligentsia dreaming of the time of reforms. They had a chance (Yavlinsky) and they blew it.
Electronic social networks in Russia started way before Facebook or Twitter (after all, half of American programmers and software writers are Jews from Russia, or that’s what my programmer-ex made me believe). The electronic media there is at least 15 years old. Most popular is LiveJournal, which at the beginning had almost totally Russian-Jewish developers team even now the Russian sector of it is huge. But there are other networks, including intra-universities and business and publishing-related.
“Hope for the future, regret for the cold war”…Bill, Russia now is vehemently anti-American country. I have “un-friended”, in LJ parlance, many in-all-other-aspects- intelligent and decent people, for their hatred to Americans and idiotic uncritical acceptance of what their propaganda tells them. Have no illusions.
Tatyana – thank you for clarifying this. I worry about Russia – when people are so disgusted thy yearn for the return of Stalin.
I was able to go there about 5-6 years ago – riding a riverboat from Moscow to St Petersburg. It was am illuminating experience with many stereotypes shattered.
“the Party of Conmen and Thieves” describes members of the Communist Party before the Fall in 1990. As for Russian history – it tends to get rewritten quite a bit. I studied under Russian emigres and refugees in the 70s. They rewrote Stalinist and NY Times versions of Russian history to make it reflect what they thought actually happened.
I also studied Russia in the PoliSci dept and they strongly admired the progress Stalin, Kruschev and Mao had made. Sadly, FSOs graduated from the PoliSci department and not the History department.
Myself, I believe in free markets and minimal government. I think Stalin, Mao and the Dear Leader have shown the alternative brings catastrophe. But many FSOs believe that next time it will be better.
I think the key here is that these small entrepreneurs are working in the realm of inarticulate knowledge. The problem isn’t that they dont’ communicate well, or lack venues for communication, or any technical problem like that. The problem is that their sector of the economy is inarticulate by nature. That’s why markets exist; they correlate and disseminate inarticulate knowledge better than any other human institution ever devised. Thomas Sowell has written about this extensively in Knowledge and Decisions, which I consider his most brilliant book.
The real problem is that the social institutions that deal with articulate knowlege — the academy and most of the press — are contemptuous of inarticulate knowledge. Their hubris will lead to nemesis if we cannot find a way to reverse this. We need both articulate and inarticulate knowledge, and the institutions that support each. And we need those institutions respecting each other’s sphere.
Vader, that is an excellent point.
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