Monday, June 28, 2010

Entrepreneurs who actually create jobs need a voice to shape policy and politics

The standard Republican narrative for economic development goes something like this: in order to attract businesses to come here, we need to create a business-friendly environment, and that means low taxes and fewer regulations.

Thus, according to the standard Republican playbook, the way to increase employment is to lower taxes, particularly on the wealthy.

The Chamber of Commerce follows that Republican line, fiercely opposing most of the Democratic Party's agenda (buying more and better health care and education through higher taxes on the wealthy, imposing more regulations on businesses to better improve the lives of regular people).

The great disconnect is between the entrepreneurs who are actually creating jobs (and the first job they create is their own) and the Republican-leaning Chamber of Commerce that purports to speak for them.

Chambers of Commerce (particularly federal and state) primarily represent established businesses. Big companies have budgets to join groups like the Chamber, while smaller, growing companies typically do not. So the "voice of business" tends to sound a lot like the voice of Republican low-tax ideology and push for the interests of big businesses (that tend to downsize and fire employees more than hire new ones).

This disconnect came home for me this legislative session in Springfield. I was working against a bill pushed by the banks that would essentially allow lenders to make more money from their business loans. Thus, the business borrowers would pay more money. The Illinois Chamber of Commerce supported the bill, siding with the banks over any business borrower. During committee testimony, a senior Republican legislator asked why in the world the Chamber of Commerce was supporting the bill. And the unspoken answer is that most business organizations promote the interests of their largest members -- big banks, big utilities and big insurance companies.

But entrepreneurs have diametrically opposed interests to the banks, utilities and insurance companies. We want cheaper credit and the banks want more expensive credit. We want cheaper energy and the utilites want more expensive energy. We want cheaper and better insurance and the insurance companies want to charge higher premiums and pay out fewer claims. So when there is a bill that could tilt the balance of power between entrepreneurs and the banks, insurance companies or utilities, guess which side the Chamber of Commerce always takes? Not the side of the job creators.

The frustrating thing is that I believe most legislators want to do the right thing -- and if we can show that entrepreneur-supportive policies which are generally Democratic-leaning policies (regulate the banks, insurance companies and utilities to create cheaper and better products) will create more jobs than the alternative, we'll get some traction. The trouble is there isn't enough of a voice for the entrepreneurs to explain the more effective way of creating jobs than just lowering taxes and regulation -- by explaining exactly how they have been successful so far at actually creating jobs. The Chamber is supposed to play that role, but they largely don't.

We need an organization of entrepreneurs to engage in politics and policy development. And by the way, I count leaders of non-profit organizations in the definition of entrepreneur. Someone who starts and runs a dance company or an after-school program can create the same amount of jobs as someone who starts a software company or construction company. Cutting corporate taxes doesn't affect the growth of a non-profit organization (that doesn't pay any). Developing public policies to encourage more employment has to include the needs of non-profits as well, or we'll skew the results and end up with suboptimal policies.

Of course, some Chambers are better than others, but the US Chamber of Commerce is now one of the main political organizations against President Obama and the Democratic-led Congress, planning to spend $50 million in 2010 to unseat Democrats, according to this Washington Post article.

For entrepreneurs who understand that Democrats have been delivering real job-growth policies (like the Wall Street reform package forged this week that will allow us to get cheaper credit or the health insurance reform law that will allow us to get cheaper and better health insurance), we need an organization of our own. And quickly, before voters make up their minds.

No comments: