Let me tell you about a small businesswoman I know. She was born in 1975. Her home was not so different from most others, filled with school and friends, love and happiness. The image of her father and mother working all day so that she and her two brothers could have a comfortable life indelibly marked her psyche.
So, when it came her turn to leave the nest, she instinctively knew that she would become self-reliant, building her life just as millions before her had. She opened her business in 2010. It was tough at first, she had to carve a niche among fierce competition. But after years of long days and even longer weeks she finally had something that could support her. It wasn’t much, small business rarely is, but by 2020 she had a dozen employees and she was able to finally make a decent income. She knew if she could lower her costs there would be more for her and her employees, but between insurance costs, city and state fees and regulations, and taxes that was just not going to happen.
Sometimes she didn’t have enough cash to make payroll or buy materials, so short-term bank loans were always there. But she had faith that her business could generate enough income to pay them off. Anyway, she could include their cost in her selling prices, so these loans were just a cost of business and she was still able to scrape a small profit.
All of that was nagging, but she knew when she got into it that there would be hard work and little reward. The true reward was her independence, her ability to hire workers and pay them a decent wage. After all she was pursuing her dream and helping others pursue theirs.
But suddenly all of that changed. The virus was frightening enough but her world was about to collapse. First her customers dried up. Then government forced her to shut down, made her employees stay at home. She understood what was at stake and she wanted to be a patriot, so she was wiling to give up a couple of weeks to help. What she didn’t realize was that an economy, the structure that allowed her to start and run a business in the first place, was not like a light switch; it was not something that can be turned on and off at will. Suddenly that realization struck home, she wasn’t down for a couple of weeks, she may be down for months and it may be years before she is back to normalcy, if ever.
Then the word came that the government was going to help. But what form would help take? She was offered a loan for a couple of months’ worth of wages and rent, a loan that was forgivable, whatever that meant. And then more from the government, she now found that she could make all kinds of loans. What was that all about? She could be loaned money for thirty years at low rates, but she still would have to pay it back. These weren’t loans she was used to. The loans she was used to were short term borrowing she needed to keep her normal activity going, they were a cost of her business, blended into her selling prices. No these would be an extra burden and they would require her to pledge everything she had that they would be paid back.
Though she knew that her revenues would be way off, she considered that if she took these loans, she would be able to keep the doors open. She knew that that meant instead of her small yearly profit, for some time to come she would be losing money. And she knew that every month like clockwork she would have to pay back her regular bank loans plus the government loans. If she was only making a small profit before she was shut down, surely now the extra burden of government loans would ensure that nothing was left. She also knew that having extra debt on her books would prevent her from making those critical operational loans and from buying materials and getting contracts, and that meant her ability to grow or pay more was out of the question.
So, what good was a weakened business propped up by long term government loans? She had two options, face years more of struggle or just close.
Most people have no idea of the thinking of small business people. Most folks don’t realize that small business people employ nearly 50% of workers in America, Worse, most leaders in Washington and Baton Rouge have no real plan how to restart an economy that is literally dead. They seem to think that small business people will happily take government loans, hire everyone back, and then everything will be ok. They can get away with that in Washington, they just print more money and make more loans knowing that someday someone else will have to worry about them. But this small businesswoman and the millions like her know that debt must be repaid, and they face the reality that if it isn’t repaid a hoard of lawyers will descend upon them to take everything that they ever owned.
Debt is a huge problem for all, but especially naïve business people. Debt, that favorite tool of politicians, lives as a cancer on the body business, slowing devouring the ability of that body to fulfill its destiny. For good or bad, the government chose to shut down the economy and government owes business people something more than just crippling debt.
Perhaps instead of massive spending to keep politicians in power, government at all levels should enforce austerity upon itself for a few years. Perhaps government could eliminate crippling rules and regulations that strangle small business. Perhaps government at all levels could use newfound austerity to reduce the taxes and fees that suck the lifeblood out of small business.
Perhaps maybe perhaps, America could be returned to the people who, unlike politicians in Washington and Baton Rouge, are the backbone and strength of this nation. Perhaps, instead of always bearing the burdens of an overwhelming government, small business people could be freed to create the jobs and prosperity that they are capable of.
Perhaps we could once again become the Land of the Free!