Margaret’s Musings: Business 101 - the free market, capitalism

Talk about it

Raise your hand if you remember being taught about capitalism and the free market while you were in school (college level economics does not count). I, like most of you, probably remember being taught about socialism and communism because it was included in social studies. It was, after all, important to learn about systems different from our own.

In 1987, during a trip to Czechoslovakia (a Communist state at the time) a young couple, who owned a business in Colorado, expressed concern that students in the United States were not being taught about our system of economics. It was probably traveling in a communist country, where we witnessed not yet completed reconstruction projects that had been underway since the close of World War II (for over 40 years), that caused them to bring up the subject. Our tour guide shared with us that as long as the workers showed up they got paid, so there was little incentive to actually “work.”

Over two decades later, I still remember the young couple’s concern. Capitalism and the free market made America the most successful country in the world. This system, which is so unique, is the number one reason people still hold America high on the list of places to immigrate to. Yet, I suspect it is still not a required subject at any level in our schools.

Business 101: How does it work? “Capitalism: A system in which society’s productive resources are privately owned and freely traded.”

Two area small business owners/entrepreneurs agreed to share their insights with me providing they were not identified out of fear it would hurt their businesses.

So we begin to look at the present climate. As a note if the words are in quotes they are from my sources. If not they are my own words.

“What is going on is against the American way. What has made America great? It is a guy who came from humble beginnings, worked hard, took a chance and made something of their life. That is what America is about. Go to other parts of the world if they know anything about America that is what they know and that’s what they want.”

From the beginning, waves of immigrants, right up to the present day, dreamed of economic freedom. My grandfather who as a child stole candles from St. Stephan’s Cathedral in Vienna for crusts of bread, became a shop owner in Chicago. My Italian grandfather came to this country as a miner. He became a baker, owning his own shop. Today, one of the most visible economic niches being filled by more recent immigrants, are the nail salons.

“You don’t have to be from a certain status. You don’t have to be from a wealthy family. Status doesn’t have anything to do with your ability to get ahead. A lot of it has to do with being in the right spot but a lot of it has to do with a lot of hard work.”

Challenges faced

“An entrepreneur is a jack of all trades and a master of none. You have to be everything from a plumber to an attorney, CPA, to a human resources expert, which is becoming a full time job.

“The government is taking away our opportunities. It is hard to be a small business owner because government regulation in the last ten years has increased so dramatically. We are spending a lot more time on the human resource side of the business versus growing the business or running it the best we can. It is becoming ridiculous. It is so frustrating, no matter what an employee does they are right and we are wrong. Unemployment has become an automatic — you don’t have to justify it anymore, you just get it. All of this has taken away much of our ability to run our businesses.

“It is also the uncertainty of our tax situation. Before President Reagan was elected, if you were a businessman you spent as much time worried about how to save on taxes as you did running your store. After the Reagan tax cuts, the business owners said let’s just pay our taxes and grow our businesses. For over 20 years that is what happened. A lot of small businesses owners grew their businesses (employing more people) and the economy prospered.

Today, due to that uncertainty, small businesses are now saying we are not going to grow. We are going to sit back and wait.”

Locally

“The first thing I’d say is that we take very seriously the fact that our employees count on us. This is their livelihood. This is how they pay their mortgages and feed their kids. We do everything we can to run a successful business to make sure that they are successful. I think people become detached and they don’t realize that we are people too and that we care about people and we take all of it very seriously. It is our obligation to run a successful business because if we are successful they are successful. I think people just forget that behind every business in this town is an owner that is a human being who cares about people.”

“The other thing is to shop locally. If the product, pricing and service is here, don’t drive to Woodbury. It is a whole lot better for you to spend your money here. Even if the store is not owned locally, the people who work there benefit by your shopping there.

“Hudson is a great place to do business, we have a good community, a good work force and it is a great place to raise a family.

“Look at what has happened in this community by local citizens and businesses together contributing over and above taxes, The Phipps Center for the Arts, St. Croix YMCA, the soccer fields, the hockey arenas, The Hudson Boosters, Carpenter Nature Center, The Hudson Hospital, St. Croix Business Park and the Hudson Community Fund. None of this would happen if this was a bedroom community and everybody made and spent their money in the cities. It only happens because we have a thriving business community.

“If you have tried to raise money in this town, you realize we have a very generous business community. I don’t think people understand that.”

What is the future?

“We talked about the personality of a business person. You have to be a risk taker to be in business — it is just the personality type. You got to have somebody who is not afraid to fail. A successful business person has failed at some point in their life. And that somebody has pulled themselves up by their boot straps and kept on trucking. With that, there is an element of risk because at some point in time you have to put either everything you own or most of what you own on the line to do something.

“To do that you there has to be a reward. It is a balancing act, risk and reward, supply and demand. That is what some people don’t understand. If the business is going to risk something, then there has to be a reward but if you take away the reward by increased taxes, an unreasonable burden of health care or an uncertain future interest rate because of the debt load of the government, it stifles business. That is why the economy is stuck right now. That kills the economy and I am not the only one thinking this.

“We are lacking true leaders that have the vision of where our country should go. Everybody is worried about getting reelected.”

In the spirit of community, why not yet reach out to your “neighbor” who is local business person and thank them for taking the risk. Our community has thrived because of the partnership between businesses, civic groups and individuals.”

If you want to learn more about how the free market, capitalism and why government regulations (put in place by both sides of the aisle) are killing our economy you may consider reading, “Your Teacher said What? Defending Our Kids from the Liberal Assault on Capitalism,” by Joe and Blake Kernen, (this is not a condemnation of teachers, in fact, Kernen is full of praise for his children’s teachers in every area except one —economics) or “The Secret Knowledge,” by David Mamet. Just to be clear, I may not agree with every idea presented. That does not discount, in my opinion, the valuable information contained within the covers.

Tags: opinion, columns, business