Calling Small Business Leaders

Calling Small Business Leaders

Small business leaders play an important role in our democracy.

It’s hard running a small business. And these days, it’s getting much harder. Inflation, supply chain issues and labor shortages are but a few of a long and growing list of headwinds faced by small business leaders. It’s enough to get folks to show-up for work, so product and services can be delivered, let alone figure out a hedge against inflation. So, when someone suggests the small business leader engage in politics, it’s no wonder the suggestion is met with a catatonic stare. Yet, if one is not engaged in politics, those who are engaged will ultimately control what happens to the rest of us, which includes small business leaders.

Far too many of us are inclined to see politics as “dirty”, and something with which we want nothing to do. “I’m not into politics” is what many of us say. But do we really know what this means, especially in a system that’s supposed to be democratic?

The first definition of the word “politics”, from the American Heritage Dictionary, reads, “the art or science of governing or government.” In a democracy, a system of governance that literally means, “rule by the people”, not being “into politics” is not only an abdication of responsibility, it sets the system up for failure. And failure is happening all around us.

One of the most important things to understand about business is that it takes place within a system. Not unlike all things in nature, the system governs business behavior; it has evolved to include constraints that affect what business can and cannot do. As in nature, cherry trees do not grow in deserts. This is because the biosphere, over a 4.5B year history, has evolved such that cherry trees may grow in Michigan, but not in deserts. This doesn’t mean there is no life in deserts. What it means is that the desert is a system that does not support the growth of cherry trees. It may support the growth of cacti, but not cherry trees. The systems that govern business, in like fashion, allow things to flourish under certain conditions, and to die under others.

Notwithstanding the constraints coming out of the natural world (e.g., access to minerals and other raw materials) the systems that govern business behavior are created by human beings. And, as noted above, they evolve. For example, before Friedman’s theory of shareholder primacy, which hit us in 1970 and posits the sole purpose of business is to maximize shareholder value, the multiplier between the highest paid officer of a publicly traded corporation, and that of the lowest paid employee, was roughly twenty-five. In the late 60s, CEOs were paid roughly twenty-five times that of the lowest paid employee. Today, the multiplier is somewhere around 670. That’s how evolution works in human created systems: We grab hold of an idea, put it to work, and then see what happens. That the notion one person, the CEO, is worth 670 times that of the lowest paid employee (those “essential workers” who actually create value) ought to strike us as absurd. But that’s another property of evolution: it’s hard to see it happen.

Environmental impacts, employee safety, standard working hours and a host of other factors, to one extent or another, are shaped by regulations enacted through our systems of government. While CEO pay is something left to shareholders to decide – which, can be rightly argued, is a miscarriage of justice – matters such as environmental impacts are a different story.

Since the start of the environmental movement in the 60s, we’ve seen tremendous improvement in the quality of our air, land and water. And while we have much, much further to go, the role government regulation played in bringing about the much-needed changes cannot be denied. Despite this reality, however, we have for many years lived under a somewhat surreal notion – one informed by neoliberalism – that left on their own, markets will naturally move business to behave in ways that deliver social, environmental and economic justice. The evidence, however, does not bear this out. For example, large, multinational corporations have off-shored jobs and much of their operations as a way to avoid the cost of unionized labor and environmental and safety regulations. That they were allowed to do these things is as much a failure of government as it is anything else. After all, we were told by Ronal Reagan that “government is the problem”, so he and his neoliberal courtiers got government out of the way. What we see today is simply another aspect of how human systems evolve.

That government is supposed to play a vital and essential role in “leveling the playing field”, and thereby ensuring some sense of justice, ought to be clear. That it is not doing so is a matter left to us, We the People, to address. That’s how democracies work. It is an absolutely absurd proposition that democratic governance “is the problem”. The problem is not democracy, but an increasing concentration of power among a fairly small number of people who happen to command a tremendous amount of wealth. What we see today is losing its democratic flavor, and would be better described as a plutocracy, or “rule by the wealthy.” Our electoral politics are so corrupted by dark money NGOs as to render the electorate nearly impotent. What largely informs our voting habits amounts to little more than mass manipulation, rather than a thoughtful study of the issues. Worse yet, we now have a former president who – for the first time in US history – refused to participate in a peaceful transfer of power. He’s also managed to convince a significant segment of the population that he “alone can fix it.” Thinking one person can fix a system as complex as the US social order is what leads to an autocracy, or “rule by one person.”

Autocracies, as is being born-out in Hungary, do not bode well for small businesses. When power is concentrated under one person, only those who toe the autocrat’s line will find success. We see evidence of this in Florida, where Governor Rick DeSantis has threatened to revoke the liquor licenses of a couple establishments, because they hosted gatherings that do not fit his perception of what’s morally right. That the executive of Florida’s state government is threatening to exert his will at such a low level is the sort of thing autocrats do.

Closer to home, in Michigan, we witnessed an antecedent to autocratic rule: the naked power grab. On August 31, the Michigan State Board of Canvassers split along party lines in their vote to place the Promote the Vote 2022 initiative on the November ballot. The initiative includes a number of provisions aimed at fixing flaws in Michigan’s electoral processes and will make it easier for people to vote. The two Democrats voted in favor placing the proposal on the ballot, while the two Republicans voted it down. The rationale for not approving the initiative is flaky at best, and at worst, represents the extent to which people will go to undermine our democracy and further solidify power.

Michigan ballot initiatives, such as Promote the Vote 2022, are required to be circulated as petitions and signed by a specific number of registered voters. In this case, the process started in February, with the State Board of Canvassers approving the language of the petition. By the deadline, which was in early July, the Promote the Vote organization submitted its petitions with well over the required number of valid signatures.

As has been the case for many years, the only role the Board of Canvassers fulfills, once the signed petitions have been submitted, is to validate the petitions. By the time the canvassers met, which was in late August, the work of certifying the signatures had already been done by state bureaucrats. So, in essence, the canvassers have a perfunctory role. In this case, when the Board met, the GOP canvassers voted not to approve the initiative because the wording of the petition was ambiguous. Never mind the fact that the wording had been approved by the same canvassers in February. The wording had not changed; yet somehow, between February and August, it became ambiguous.

The most plausible explanation for why the GOP members voted not to place Promote the Vote 2022 on the November ballot is the party’s track record of undermining democratic norms. In numerous states across the country, GOP led initiatives have been successful in what amounts to making it difficult for people to vote. Those most affected by these initiatives are the poor, who tend, by and large, to vote for Democrats. What happened in Michigan, and what’s happening across the country, is nothing more than naked power grabs. Considering the former president – the one who was legitimately turned out of office in November, 2020 – happens to behave like an autocrat, and is also a member of the GOP, small business leaders ought to be very concerned about the direction in which America is heading.

Those who are US citizens of age have an obligation to engage in our political system, and this isn’t limited to casting a ballot on election day. As Jefferson put it, “Whenever the people are well informed, they can be trusted with their own government; that whenever things get so far wrong as to attract their notice, they may be relied on to set them to rights.” In other words, if we are to preserve and ensure the vitality of our democracy, we have an obligation to be informed and take-on the work of righting things when they go wrong.

There can be no doubt that our body politic writ large is under serious threat. If we continue along the path we trod, the result will be an autocracy, wherein little will be left of what we think of as “free enterprise.” This reality ought to concern any small business leader. Autocracies demand fealty to one person, and if that person doesn’t happen to like the way a particular business behaves, there’s a good chance that business will not be around for long.

Small business leaders are trusted members of their communities, and as such, have a greater responsibility as citizens. Their employees, customers and others from within their communities look upon them as leaders and therefore expect more. Small business leaders can play a significant role in preserving what’s left of our democracy and setting it on a better path. From things as simple as providing employees time to vote, to speaking-out in support of voting rights and access, small business leaders can influence others to engage in politics. Politics is not a dirty word, but an essential part of life in a democracy. When the People engage in politics, and work together to fix the things that have gotten “so far wrong as to attract their notice”, the system will work for the better of all.

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