Saturday, June 4, 2011

Give businesspeople a little credit

I'm with Jonathan Bernstein on this one: the reason that the economy isn't growing robustly just can't be that American businesspeople are terrified of tight new regulations that the Democrats are going to impose any day now but just haven't gotten around to imposing yet.

Look, I've never started a business. But my impression of businesspeople is that if they think they have a money-making idea and they can get the necessary capital together, they're going to start a business regardless of which party controls the White House or the Congress. And if they think they can make more money by expanding, they're going to do that as well.

It may well be true that a substantial chunk of business leaders, perhaps even a majority, prefer that Republicans control the government. But, generally speaking, they're in business to make money, not to prove some political point. They're also capable of doing a little research, and they know that businesses did very well in the last Democratic presidential administration.

If businesses aren't hiring right now, it's probably because they're not convinced that taking on more employees will be a profitable move at this point in the economic recovery. That's not nuts. Demand for a lot of products is still low thanks to the nastiest recession since World War II. But to suggest that businesses aren't hiring because they're terrified of the socialist takeover that's coming any day now but somehow just hasn't come yet strikes me as silly and more than a little insulting to entrepreneurs. I doubt most of them are that irrational or timid.

Similarly, I question Denver mayoral candidate Chris Romer's claims that removing red tape will allow Denver's businesses to suddenly start hiring. If there truly are regulations that protect no one and just annoy businesspeople (an iffy proposition), sure, get rid of them. But I just can't imagine there are business owners sitting around saying, "I could make a mint by expanding my business right now, but I just don't want to fill out all those damned forms."


Anonymous said...

RE: "creating jobs" This American Life did a great piece on Gov. Walker in Wisconsin and who gets/should get credit when jobs are added.

Anonymous said...

Hey Seth,
Well Ive started a business (Pre Grad school) and can contribute a couple of observations. First, I think your intuition is correct. For people who really know what they are doing (not me) and aren't already very successful, the biggest impediment is raising sufficient capital. And from what I read, the capital markets appear to still be be quite tight for new businesses. I will say that for small business, the regulation issues are/were serious because they can eat a lot of time and be extremely frustrating especially if you don't have a slew of employees to deal with them.