The Business of Families

Volume 11, Issue 36

According to the Internal Revenue Service, there are 30.2 million small business owners in the United States. The definition for this category of business is 25 employees or fewer. In a nation with a population of approximately 340 million people, this number of small businesses may not seem impressive. What is incredibly extraordinary is that these small businesses employ 50% of the non-farm adult workforce, produce 50% of the national Gross Domestic Product (GDP), and are responsible for the creation of 80% of all new jobs. These small business facts do not exist to this extent in any other country in the world. One would think that such statistics would not only seem impressive, but mandatory in consideration for all government economic policy.
Yet the federal government is implementing regulations that will stifle, if not eliminate, the growth of small businesses. And they are doing so without sensitivity or compassion for the pressure this puts on American families.
Of the 30.2 million businesses, one third are non-family corporate entities consisting of multiple investors, partnerships, venture capitalists, and sole proprietorships. Two-thirds or 20 million businesses file their tax returns as family-owned businesses. One third or 10 million self-identify as Christian family-owned businesses. The interesting thing about family-owned businesses is that the top two reasons they give for establishing a business is to have more control of their time to spend with their family and to provide a service to the local community. Making a profit, although important, is on average the fifth objective.
Progressives, in an effort to prioritize the needy, are in particular, pursuing banking regulations that restrict normal resources of capital for family-owned businesses. What used to be commonplace as a banking practice was loans using inventory or accounts receivable for collateral. Such loans are now criticized and, by regulation, made much more difficult. Any community banker who has been in business over ten years will tell you that he or she can remember a time when loans were made on character, financial history, and business viability. They will further tell you that those days are over.
The federal government is not bashful about expressing the desired strategy to reduce the number of community banks by forcing mergers into larger regional banks. The feds have openly argued that moving most accounts into five or six banks that are too big to fail limits risk in the banking system. A bank that is too big to fail, by any other definition, is in partnership with the government. A system wherein banks are regulated as a partnership is in one sense a government-run system. The process of reducing the number of community banks is in another sense nationalization of the banking system in reverse.
What is most confusing is how can progressives pursue a policy that restricts or eliminates a sector of the economy that employs 50% of the workforce and contributes to 50% of the national GDP without any recognition of the consequences to the American exclusive societal structure, concerns for the economy, or compassion for the families affected? To answer these questions, one must take a brief look at American history versus the rest of the world.
Most countries in the world, including all major economic powers today, transitioned from totalitarianism into some form of free enterprise or hybrid capitalism. There was a societal evolution centered on the core imperative that “birth is destiny.” From ancient Egypt through the Roman Empire, privileged citizenship was determined by bloodlines and hierarchical authority. This concept that nobles had rights by birth over other citizens was continued through the kingdoms of Europe and the colonialization of Central America, South America, and Africa. China constituted the structure of an imperial society through different dynasties over 5,000 years.
In 1776, the United States declared independence from parochial lordships, declaring that “birth is not destiny.” Governments are formed to serve the people. The people receive their rights and freedom from God. Government receives and executes its authority as granted to it by the people. “God is sovereign over mankind. Mankind is sovereign over government.”
Further, America was settled by pioneer incentives, land runs, and the national call of Manifest Destiny. American society evolved with families migrating across the country, establishing cities, and building commerce with very little government assistance or mandates.
By the 19th century, most other countries’ lands had been explored and settled. Families were seldom free to pursue happiness as dictated by their own desires. They were perpetually under the burden of a government yoke.
The United States, by its natural evolution, became a unique nation-state of small family-owned businesses serving the needs of a local community. Their Christian faith demanded charity and sensitivity to the needs of the public. When a change in services was necessary for the moral well-being of the community, Christian families closest to the action and flexible in purpose were the first to provide innovative services necessitating reform. The government’s mandate to serve the will of the people, the democratic process, and family-owned businesses became the backbone of America economically, morally, and spiritually.
And so is the history of America.
Now, politicians would have the country believe that standardization of activities is the best policy for future generations. The failed lessons of the past still persist. There is definitely a role for government. But why must the country’s banking system be nationalized without any appreciation for the role that family-owned businesses have played in making America the strongest, most stable economic country in the history of the world.
I had the distinct honor once to represent Dr. Milton Friedman in front of the Senate Judiciary Committee of the United States Senate. Senator Ted Kennedy of Massachusetts was the Chair. The item at issue before the committee was the need for legislation to establish a constitutional federal balanced budget amendment. Dr. Friedman and Senator Kennedy entered into an intense confrontation. Dr. Friedman being the experienced raconteur was winning the debate. He asked, “Senator, socialism has not worked in 6,000 years of recorded history. Why won’t you give up on it?” Senator Kennedy, obviously angry, rose from his chair, glared down at us over the bench and replied, “Dr. Friedman, the reason socialism hasn’t worked in 6,000 years of recorded history is because it didn’t have me to run it.” His answer spoke volumes. For the first time, I understood that logic didn’t matter. To them, only the perceived equality engineered through societal standardization renders credence. Total government control disguised as benevolent socialism is the only platform to deliver the desired outcome.
I can somewhat understand the arrogance and the ego involved with those who want to restructure the American economic system to achieve their own ideological means. What I don’t understand is why they want to do it in a way that could destroy a key foundational pillar of American society. If the goal is to take care of 10-20% of the population that, for many and some with merit reasons are in great need, why do we have to sacrifice the business of families?
We are at a crossroads in the history of America. A cultural, critical decision must be made. Will we build upon the foundations of American society that have facilitated freedom or will we default to the tragic lessons of the past 6,000 years relegating citizens as the underprivileged class to serve the elites…
And, birth becomes destiny again.
My name is Marc Nuttle and this is what I believe.

What do you believe?