The recent national dialogue about the 99 percent, income inequality, and a mandatory minimum wage shows that anti-business sentiment is growing. Just how did free enterprise get a bad name in America — home to Henry Ford, Edison, Carnegie, Hewlett-Packard, and Apple?
Crony capitalism? Too big to fail? Wall Street bail-outs for big banks? Enron? Excessive CEO pay? Income inequality? The 1 percent? Corporate money in politics? All of these have certainly tarnished our perception of big business.
In fairness, these negatives don’t apply to small business. Moreover, small business is growing while big business is downsizing. Since 1990, big business has shed 4 million positions while small business created 8 million jobs. Small business now accounts for 55 percent of American jobs and 66 percent of net new jobs since the 1970s. According to the SBA, there are 23 million small businesses in the U.S. — equal to 10 percent of our adult population. Americans start 550,000 businesses each month. It’s an essential part of the American Dream.
Irrespective of size, business is an indispensable ingredient in our free society. Business pays the bills, directly or indirectly. Without business there would be no jobs, and therefore no taxes, no government, no charities, no arts funding. The USSR substituted government for free enterprise. It didn’t work then. It never will.
Next time you attend a symphony or play, notice who sponsors the performance. Who supports our charities? Most major donors are businesses or businesspeople. Business has made our lives safer, healthier, convenient and even fun. Wal-Mart, Costco and Amazon bring affordable products to us in such an array and at prices we could only dream about two or three decades ago.
It’s estimated that capitalism brought 300 million Chinese out of poverty over the last couple of decades. The same thing is occurring in India. What welfare or government program could approach that outcome?
Yet, somehow a deceptive error has crept into the current view of capitalism. It’s an easy trap to fall into: If someone makes money, then someone else has to lose money. Wrong. Suppose there are two fruit stands selling peaches and only 100 cars will drive by each day. A buyer who purchases peaches at stand A is a sale lost to stand B. A and B are in a win-lose game in this example. But that’s not how it really works. There are a lot more potential buyers. Satisfied customers will return and buy more. They’ll tell their friends, which will result in more business for both stands.
If Cuba were to throw off its backward and corrupt Communist regime, install the rule of law, and honor personal property rights, enterprising Cubans and foreigners would quickly begin to develop Cuba’s tremendous resources, restore its ports, create jobs, pay taxes and build infrastructure. Free and newly employed Cubans would become consumers. Cuba would begin to export and import billions of dollars of products as it used to do. On a net basis, Cuba’s economic success will increase the size of the world economy. The phenomenon of free enterprise — people following their best interests — will have created that many more Cuban buyers, producers and sellers.
Wealth is not finite. Wealth can grow without limit. This law of infinite growth still applies in America, and we can all prosper by it.
Napoleon famously dismissed England as a “nation of shopkeepers.” His quip acknowledged that England’s formidable geo-political power grew out of its potent commercial economy. Likewise, our unparalleled economic power enables America’s superpower status.
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Granted, business excesses must be curbed by the market and by regulation. We also need to help more people participate in the American Dream through education and training. But don’t believe people who say we need more government and less business and that business is selfish and even evil. We need more, not less economic freedom, more entrepreneurs, and fewer tax and regulatory roadblocks. Let’s not kill our golden goose — legitimate and productive businesses.
Greg Bell is the former lieutenant governor of Utah and the current president and CEO of the Utah Hospital Association.