How the Next President can be the ‘Small Business President’

the politics of small business

Thomas F. “Mack” McLarty, III served under three presidents – Bill Clinton, George H.W. Bush and Jimmy Carter – and now he is the chairman and founder of McLarty Associates and chairman of the McLarty Companies, a fourth-generation family transportation company.

That’s an incredible resume and I think it proves that he’s a “straight shooter,” a practical man and a man who understands how this country works.

He just wrote a piece for the U.S. Chamber of Commerce that’s an open letter to whoever becomes our next president, urging that person to be the “small business president.” That’s wonderful advice, but not easy advice to carry out, and here are some reasons.

Writing for the Small Business and Entrepreneurship Council recently, economist Raymond J. Keating outlined a survey of small business leaders that detailed various ways state small business development programs go wrong. He wondered if they are more a boost to small business or merely political grandstanding.

My fear is that if our next president takes McLarty’s advice, the net result will be more political grandstanding than support for real small business. Here are some of the findings in the study that Keating discussed.

  • Too much money is spent on big incentive deals that end up hurting state finances.
  • Spending is biased toward big businesses.
  • The voice of small businesses isn’t represented in state capitals.
  • Small businesses that want to grow aren’t getting the help they need.
  • Current state economic incentive policies are ineffective in promoting economic growth.

We’ve documented the problems, excesses, and misappropriation of “small business” grants before, and I have no reason to think that this kind of thing will soon stop.

Too often our leaders create a commission, a department or a special board, or fund spending in a certain area and they point to those things as “accomplishments.” An elected official might boast to voters by proclaiming, “Since I was put in office, we have created – and fully funded – the Boost Small Business Board!”

That sounds great to voters, but the real issue is to find out if it has had any real impact on small business growth or creation. The irony here is that in scenarios like the one I’ve just described, the politician is essentially using our money to buy our support: our tax money goes to the government, the government spends it to hire bureaucrats to fill out a new board, and then the elected officials tells us that he (or she) has done something special for us.

Keating very succinctly described the kinds of things government can do that would really help small business:

What actually matters for entrepreneurship and small business growth from a policy perspective is to establish a climate in which entrepreneurs, businesses and investors are free to innovate, invest, compete and grow, with the market guiding resource allocation rather than government, thereby driving economic, income and employment growth forward. That means keeping tax and regulatory burdens low, property rights protected, and government limited but as effective as possible in its legitimate undertakings.

Unfortunately “establishing a climate” is far less appealing to politicians than creating a program or handing out grant money. When you hand out a $1 million grant you can get one of those oversized checks made and have your photo snapped handing it over to the lucky recipient. You don’t get that opportunity if you’re doing the less glamorous work of removing barriers to business growth.

I hope our next president, whoever that is, will be a person who doesn’t need to grandstand and who understands that improving the business climate will improve the living standards of Americans across the board. I hope this person is content with doing the right thing even if it doesn’t create splashy headlines or photo ops.

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