by Thomas Frank
Management-speak saturates the movement. Tea Partiers sometimes write about “core competence” when they mean protesting, “political entrepreneurs” when they mean leaders, and “early adopters” when they mean rank and file.4 One of the movement’s favorite texts is a work of management theory. There even used to be a Tea Party website that kept a list of favorite CEOs.5
The entrepreneurial personality is never absent where tea-sippers gather. Don Crist, author of the booklet What Can I Do?: After the TEA Party, describes himself as a “small business consultant,” while Stephen D. Hanson, author of Transcending Time with Thomas Jefferson, is “a small business owner and mortgage loan executive.” Senator Jim DeMint of South Carolina, the Tea Party kingmaker, tells fans that his prepolitical career as a “small business owner” is where he learned his signature antigovernment politics.6 And Republican presidential candidate Herman Cain earned his own conservative spurs back in the nineties when he denounced Bill Clinton’s health-care proposal on behalf of the nation’s small businesses; today he presents himself as a man in touch with “the real folk.”7
Glenn Beck also glories to remind the world of his small-town, small-business roots, and throughout the fall of 2009, the TV host could be found protecting the pale flame of small-business populism as it flickered unsteadily in the socialistic winds blowing from Washington, DC. He interviewed panels of small-business owners, talked up the number of jobs small-business owners create, and saluted their generalized, all-American greatness: “They represent the spirit of America,” he said on one particularly maudlin occasion, “what used to be the American Dream.”8
The new crop of conservatives elected to Congress in the 2010 landslide often talk as though protecting small business was the special cause for which they had been called forth from behind the plow. Mark Kirk, now a U.S. senator for Illinois, proposed a “Small Business Bill of Rights” during the 2010 campaign season,* while the campaign website of Congressman Francisco Canseco of Texas included this astounding call for the dictatorship of the entrepreneur: “We must put the reigns [sic] of our economy back into the hands of American small business owners.”9 Empty rhetoric, to be sure, but consider the implications had Canseco meant this sincerely: given that small business surrendered the economy’s reins to finance and large-scale manufacturing in the period after the Civil War, he would essentially be demanding the reversal of nearly a century and a half of modernity.
A survey by the New York Times found that small-business owners made up nearly 40 percent of the Republicans swept into the House of Representatives in 2010—a dramatic increase from small business’s representation in previous years.10 If we count the GOP freshmen who were endorsed by the National Federation of Independent Business (NFIB, the main small-business trade association), our census of small business allies comes to 74 percent of the new Republicans in Congress.* Soon after arriving in Washington, a bunch of these entrepreneurial legislators got together in what they called the “Congressional Job Creators Caucus,” open only to small-business types. And when they held the economy hostage during the 2011 debt-ceiling debate, they did so because they knew government had to operate like a small business.11
Wait, go back: the Job Creators Caucus? Let me admit here that, for all my skepticism, I was a little startled by the epic fraudulence of that phrase, the fake sense of accomplishment that it must require to call yourself a “job creator” while excluding almost all of your colleagues from the designation. Nearly everyone in Congress believes they’re helping to create jobs, whether they’re voting for the giant stimulus package of 2009, writing up a tax loophole for a campaign contributor, or earmarking a “bridge to nowhere”—heck, even supporters of the Obama administration’s hated cap-and-trade proposal believe it will create jobs.
Ah, but according to the purified market populism of the conservative renaissance, those other members of Congress are simply mistaken. Government cannot create jobs; it’s impossible by definition. The only entity endowed with this power is business, and the smaller that business is, the more potent its job-generating magic. Thus one of the great catchphrases of the period: “Government doesn’t create jobs; you do,” as Republican freshman Nan Hayworth of New York put it in a speech to business leaders in her district.
One reason the Right fastened on the “job creator” line so avidly is because it allowed them to flip the script of the hard-times scenario. When people were out of work, they insisted, the important thing was not stimulus packages or public works or social insurance: it was giving small-biz trade associations every last little item on their legislative wish list. The nation’s job creators had to know they were loved. Their confidence had to be carefully built up; their biases had to be catered to; their every caprice had to be enshrined in state policy.
Unfortunately, no one seemed to know for sure the exact quantity of jobs these job creators actually created. In 2009, President Obama credited small business with 70 percent of the new jobs in the economy, but conservatives sneered at such a feeble number. Ninety-seven percent of new jobs was the figure Glenn Beck gave during an interview with the president of the American Small Business League in March of 2009; by October of that year, his views had moderated slightly, and small business was said to be creating only 80 percent of the new jobs in America.12
The reason no one can give a definite answer is that small-business job creation is a myth. It has been thoroughly debunked by journalists and academics over the years; it only got its start thanks to a statistical illusion created during the eighties, when big businesses were beginning to outsource everything they could to small, no-benefits firms in order to suppress labor costs.13
But against the amplified righteousness of the conservative revival, such facts had as much chance of being heard as does a kitten’s gentle purring while a freight train roars by ten feet away. The country was in a deep recession; unemployment was high; the job creators must be empowered to do their thing.
So it was that David Rivera, a GOP freshman from Florida, was able to declare on his campaign website that “the biggest problem our economy is facing”—the biggest problem, mind you, even after the near collapse of the nation’s financial structure—“is that business owners, especially small business owners are nervous, and reluctant to start hiring again.”14 And since small-business owners were such world-champion job creators, their nervousness was a matter of grave public concern. If we wanted to help the unemployed, we had to soothe small business’s jitters. We had to assuage their fears. We had to grant their wishes.
Let’s Drink to the Salt of the Earth
Small business is traditionally cloaked in a haze of populist heroism. Like family farmers before them, entrepreneurs are thought to be sacred: they are individualism in the flesh, the plucky strivers who have always made the American economy go. If you put aside details like the benefits that mom-and-pop stores generally don’t provide their workers, small business can sometimes seem like the last redoubt of Jefferson’s independent yeomanry.
In a 1983 speech commemorating Small Business Week, for example, Ronald Reagan started off by saying, “Every week should be Small Business Week, because America is small business.”* It just got sappier from there: “entrepreneurs are forgotten heroes”; they’re “the faithfuls who support our churches, schools, and communities, the brave people everywhere who produce our goods, feed a hungry world, and keep our homes and families warm while they invest in the future to build a better America.”15 Oh, they’re the salt of the earth. The roots of the grass, the dreamers of the dream, the vox of the populi, the common man in all his upstanding righteousness.
And everyone wants a piece of that righteousness. Liberals, for example, like to salute small business because that way they can seem to be “pro-business” without openly endorsing Walmart or Exxon or JPMorgan.16 Perhaps also, deep in their subconscious, lingers a tribal memory of the days when small businessmen were members of the progressive coalition, soldiers in William Jenn
ings Bryan’s crusade against monopoly, and reliable supporters of reform because reformers used to make a point of enforcing the nation’s antitrust laws.
Not only has the conservative revival harvested the righteousness of the brave little entrepreneur; it has adopted the small-business mind-set. With this understood, several of the peculiar ideas of the newest Right immediately make sense. Its insistence that an alliance of big government, big business, and big labor have come together under the banner of “socialism” and closed off true competition in America, for example, might have been drawn from some pamphlet circulated by a small-business trade association generations ago.17 The movement’s undimming rage against organized labor, otherwise so pointless in the largely union-free twenty-first century, is one of the fixed obsessions of the small-business mind. And the notion that “real” capitalism can and should be quickly restored has been the entrepreneur’s panacea pretty much ever since small business surrendered pride of place to large-scale industry in the mid-nineteenth century.
Similarly, the movement’s reverence for an imaginary past, for “taking our country back,” is merely a displaced longing for the distant days when small-business people were men of preeminence in their community. The conservative revival’s single-minded focus on bailouts stems from small business’s historic hostility toward monster banks, now reincarnated as “too big to fail” institutions and locked in an unholy union with monster government.* (“Congress spent billions of dollars in stimulus money to bail out big banks and financial institutions,” declared Congressman-to-be Pat Meehan of Pennsylvania in 2010. “But your average small business owner simply has not seen the benefits.”) Even the Tea Party’s famous agnosticism on social issues reflects small-business priorities. While almost all entrepreneurs tend to be conservatives on matters economic, according to the NFIB, many of them take a liberal stance on social issues like school prayer.18
But it is the movement’s obsessive fear of “burdensome regulation” that really marks it as a product of the small-business mind.
For decades, middle-class Americans loved telling one another scary stories about Invasive Regulators. The tales always unfolded in the same way: A small businessman was doing something eminently reasonable, minding his own beeswax, when—out of nowhere—he was hit with some outrageous EPA fine or tripped up by some hypertechnical OSHA demand. Obvious realities would be disregarded in the bureaucrat’s zeal for rule-following; time would be wasted; business would not get done. It was as though our government wished to punish productive effort!
Stories of Invasive Regulators were a constant feature of the comfortable midwestern milieu into which I was born. Ronald Reagan tossed them off all the time on his way to the White House. The plot of Ghostbusters (1984) turned on just such a small-business set piece. And the Republican Revolution of 1994 was largely driven by small-business anecdotes like these—that is, if the account of that revolution written by the then president of the U.S. Chamber of Commerce is to be credited.19
But it’s no longer so much fun to swap stories about the ignorant overreaching of the Consumer Product Safety Commission, a favorite target of the storytellers of old. That particular agency was lobotomized so effectively by the George W. Bush administration it couldn’t spot the lead paint on imported Chinese toys. Toothless regulatory agencies are what allowed the rampant safety violations at both the ill-fated Deepwater Horizon oil rig and the ill-fated West Virginia coal mine mentioned earlier. And the idea of a bank regulator getting up in an entrepreneur’s grill is the real joke nowadays. Bank regulators! They’re the ones who did so much to protect the big banks from nosy state-level officials who actually wanted to stop fraudulent mortgage lending.
One reason the bogeyman of the Invasive Regulator can still mobilize the troops, I think, is that small businesses actually experience the regulatory presence, such as it is, far more acutely than do their big-business colleagues. When we talk about the age of deregulation or the era of “neoliberalism,” we are referring to the gradual rollback of certain banking rules, the rise of a certain school of economic thought, and the privatizing of certain government functions. These are important developments in the grand, historical sense, but to a struggling small-business owner they might seem completely irrelevant. It’s hard to convince a man sweating over a fifty-page income-tax return that the state has gone away or that markets are now in charge.
And after 2008 there were some good reasons to believe—to fear—that the regulatory state was back, most obviously the universal health-care law signed by President Obama in 2010. Not only did Obamacare contain a—yes—burdensome provision that would have required businesses to issue 1099 forms for nearly every expenditure they made (it was promptly repealed in early 2011), but it required businesses with fifty or more employees to provide health insurance for workers, possibly stripping away one of the greatest competitive advantages that such firms possess.*
If “capitalism” is the system in which you eke out a living installing plumbing or selling farm equipment, it is understandable that you feel that government interferes enough in capitalism already. If “capitalism” is the system in which no-doc loans are handed out indiscriminately in order for the management of some mortgage firm to hit some bonus target, then packaged up and sold off to some hedge fund so that its management can hit another bonus target, well, we are talking about something entirely different. The journalist Matt Taibbi got this aspect of the right-wing renaissance exactly right when he recounted, in a 2010 interview, how
most of the Tea Party people I talk to—a lot of them are small business owners. They have hardware stores or restaurants, and they see regulation as an ADA inspector or a health inspector coming to bother them and ring them up with little fines here and there. That’s their experience with government regulation. And so when they think about JP Morgan Chase and Goldman Sachs and regulating those banks, to them it’s the same thing. They have no idea that regulation for these big companies is really a law enforcement problem, that it’s not this little niggling health inspector type of business.20
The distinction between these two kinds of capitalist practice is not something the renewed Right has much interest in clarifying. Rather than acknowledging the outlandish practices that actually went on in the mortgage industry, to name the most important chapter of recent business history, conservatives push the blame back where many business owners suspect the blame belongs: the deadbeats who took out all those mortgages in the first place.
And also back to the usual, all-purpose culprit: government. The only way lending standards get weakened, in many businesspeople’s experience, is when federal agencies get involved. And where they’ve seen such weakening most prominently—or believe they’ve seen it, as certain historians of small business attest21—is with minority-owned enterprises, which are sometimes granted set-aside government contracts. It’s simple enough to imagine that the pattern extended to mortgages as well; that the feds forced banks to hand out special loans to minority borrowers, as the famous theory goes;* and thus to conclude that the entire financial crisis was a consequence of government interference in what ought to be—used to be!—private affairs.
And the bailouts! To your average entrepreneur, it was an unmitigated insult to watch the big banks get an injection of capital from the Fed and the Treasury on terms that no local business ever receives. For some, the bitterness still lingered nearly three years later. When it was revealed in August 2011 that the bailouts had been far larger than originally reported, conservative leader Richard Viguerie took the occasion to look back in anger. Recalling the optimistic statements issued by Morgan Stanley at around the time the firm was borrowing almost a hundred billion dollars from the Fed, Viguerie wrote, “Try that line with your bank examiner and securities regulators if you are a local banker.” Describing the deal’s outrageously favorable terms, he steamed, “Try getting that deal if you are a small manufacturer anywhere in America.”22
For Viguerie
and for thousands of others, the bailouts confirmed one of the baseline convictions of the small-business mind: that big business is in league with big government. The idea is powerful because it is essentially true; it has been around for a long time; in fact, in 1962 the political scientist John Bunzel unearthed an expression of this bitter sentiment that, though written in the mid-fifties by an officer of a small-business trade association, might have been published on a Tea Party blog last week. Big business, the accusation went,
goes along with big labor, with big government, with fascist [!] and corporative tendencies in the government—with NRA first and then with OPA and OPM and WPB industry committees—anything for harmony and convenience and job safety for management, regardless of what happens either to the country or to the other fellow.23
It is because of fixed images like these that the bailouts triggered such an immediate reaction on the Right: it was the entrepreneur’s nightmare fear coming true in broad daylight.
The age of the giant corporation is here to stay of course, and as long as it is, big government must be on hand to curb its abuses. When the system is corrupted, as it obviously was in the case of the bailouts—and the subprime lending spree, and the West Virginia mine disaster, and the BP oil spill—the obvious answer is to clean up government so it can perform its police function properly.
But that’s not how the revivified Right understands things. Instead, they blast the entire structure of the modern economy as “crony capitalism” or “socialism” and find, conveniently, that we can only cure its ills by doing away with the big-government side of the equation—with the regulating and taxing and pension-giving side.
And thus are our choices spread before us. On the one hand, the small-business utopia; on the other, “socialism.” One system is “capitalism,” the “American Way of Life”; it is in harmony with the rhythms of nature itself; but the other is something alien, something impure, something dishonest.24
