This country’s beginning revolved around personal liberty and self-reliance. America quickly became the wealthiest nation in history on the premise of free markets and the rule of law. The Founding Fathers knew we were, and would continue to be, imperfect but they put together a remarkable document that we still have today, the Constitution.
The founders knew that limited government was supposed to act only in those areas that the citizens could not on their own, e.g., national defense, courts of law, treaties, etc.
At the heart of the founding and during virtually every decade since, the small business owner was the key to growth, creativity and the creation of wealth both on an individual and a national level. More than any nation in the world throughout history, we have benefited from the fact that any citizen or resident has the opportunity to start a business.
Small-business owners can invest their own money and/or get their friends and family to invest in their idea with them. More than anything in the world, that sole concept of opportunity, of risk and profit, has driven individuals and consequently this nation to achieve the greatest level of wealth ever created.
There is no question that starting a business is risky. Most new businesses fail. Many are not profitable for a long time. You never know if your idea will be accepted and purchased until you try.
Just about every major, and minor, development in this country and ultimately in the world started as the idea of an individual and grew into something much more. The personal PC was not developed by IBM but by two small companies by the name of Apple and Microsoft. I can name hundreds more: Facebook, Ford, Google, ESPN and Disney all come to mind.
Today, however, the story is changing rapidly. Government, at all levels, is rapidly making it impossible to own and operate a business profitably. The number of regulations imposed today on a small privately held company creates a situation where the owner must decide whether the effort and cost are worth it. If the potential for profit disappears, then what is the use of taking the risk?
The current regulatory climate creates an environment where some great ideas never get off the ground or are shot down early before they can fully develop.
The Federal Register is a catalog of federal regulations. In 1950 there were just over 9,700 pages and GDP for that decade averaged 4.2 percent. In 1960 there were more than 22,000 pages and GDP averaged 4.4 percent a year for the decade. By 1970 regulations grew to more than 54,000 pages and GDP for the decade was 3.75 percent. By the year 2000 the regulations totaled more than 138,000 pages and the growth averaged 1.73. Today we have more than 170,000 pages of regulations and look around you to see what the GDP is now. (This is not counting the Affordable Care Act or Dodd-Frank.)
If you wanted to start a business and the only requirement was to read and understand all of the regulations, would you say, “Let’s go, I’m in!” or would you say, “Singapore is looking better every day?”
“Entrepreneur” is a French word meaning “one who undertakes.” This means risk, the freedom to not only succeed but also the freedom to fail. My dad always told me I would learn more by failing than I would by succeeding. Today, failing has become an intolerable situation and the government has decided it is its duty to have all the rules it needs to prevent any negative situation for its citizens, thereby diminishing the motivation to succeed.
This attitude has laid the foundation for undermining the freedom and opportunity that made us the greatest nation in the world. We need to get the shackles off of small business and get creative again. It is in our genes and we still have the most productive and creative workers in the world. Time to suit up and become an “undertaker.”
Gary L. Rathbun is the president and CEO of Private Wealth Consultants, LTD. He can be heard every day on 1370 WSPD at 4:06 p.m. on “After the Bell,” every day on the Afternoon Drive, and every Tuesday, Wednesday and Thursday evening at 6 throughout Northern Ohio on “Eye on Your Money.” He can be reached at (419) 842-0334 or email him at garyrathbun@privatewealthconsultants.com.
