Is "populist Capitalism" an oxymoron? It doesn't need to be. The stratification that we see in capitalism as practiced, is not an essential element of capitalism as I would define it: Putting resources to use to increase production. It doesn't need to be big resources for big production. Although there are economies of scale in some heavy industries, resources can be efficiently put to work on any scale. Therefore, capitalism can bring profit to the masses, if it is accessible. "All" we need to do is identify the unnecessary barriers and remove them... Easier said than done, but I'll try.
Most Americans see themselves as being on the outside of capitalism looking in, like when Bob Euker was locked out of that party in the beer commercial saying, "Gee, looks like they're having a good time in there..." However, unlike Bob, most of us can't even picture ourselves getting in the door, so we don't even try.
For many, the emotional response to this perceived ostracism is an urge to (metaphorically) burn down the building and all of the party goers inside. Politically, this takes the form of various kinds of punitive legislation designed to either prohibit productivity increases, or confiscate profits (which ultimately accomplishes the same thing). The most powerful industries can carve protected spaces for themselves. So, ironically and sadly, many of these punishments serve only to fortify the barrier that keeps the masses out while the insiders party on.
To an existing corporation, government is a burden but not a barrier to doing business. Businesses start with or early on acquire lobbyists, lawyers and MBAs to navigate through the jungle of laws, regulations, agencies, reporting requirements, fees, licensing, safety rules, labor restrictions, and permit applications that multiple layers of government have created.
To those of us on the outside without MBAs and law degrees, the jungle is not just an impenetrable wall, but it's also a mystery, a wall without a door. I myself have an idea right now for a multi-billion dollar a year business that will change the world and make several people stinking rich. I've been driving my head against the invisible wall for over a year trying to incorporate and capitalize. I have a dozen pages of single spaced notes describing the features that the business will have, but I don't have a clue what to do next. I've talked to a variety of people (lawyers, CPAs etc.), and none of them can explain how to proceed. Even though I am a dyed-in-the-wool free market capitalist, I am totally stymied. I can sympathize with less idealistic folk who think that capitalism is for a privileged elite.
It shouldn't be this hard. I should be able to hire a couple of web developers to help me get my dot com business off the ground without worrying about how many of the thousands of pages of labor law I would be violating. I should be able to start selling without worrying about some state taxing my gross sales at some level that wipes out my profit margin.
Three Pronged Reform
In stating the problem, I noted difficulties in the law, the bureaucracy, and public perception. Therefore, reform should address each of those three things.
1.Reduction: The law (especially regulation) must be simplified.
2.Unification: Bureaucratic process must be simplified.
3.Understanding: Education and expectations about going into business need to be improved.
First and foremost, legal and regulatory burdens and obstacles need to be eliminated. Taxes and fees need to be reduced. Reporting requirements need to be reduced. Permit, license etc. requirements need to be reduced or eliminated. Micromanagement needs to be eliminated.
Furthermore, litigation risks need to be reduced. People and businesses should bear the consequences of their own decisions, but not for others' decisions. Moreover, abusing the civil court system must become an unprofitable gamble.
Above all, the total complexity of business law must be compressed until a non-lawyer can understand it completely and obey it without fear. Fear is bad for business. Between federal, state, and local governments, our current laws create a lot of mystery and therefore fear. In general, law and regulation need to be confined to the bare minimum necessary to combat predatory economic behavior without inhibiting creative economic behavior.
Here, regulation is the overwhelming oppressor. There are far more pages of regulation than legislation. Regulations aren't passed by Congress (or state legislature) or signed by the President (or governor), so they don't have to be popular, and they don't have to be debated in a public forum.
At the Federal level at least, it appears to me that all regulations pretending to bind citizens (as opposed to those telling bureaucrats how to work) are unconstitutional. I reason thusly: The Constitution states that all of the national government's legislative authority will be vested in Congress. It also says that Congress may only exercise such authority as is explicitly enumerated within.
I can't find any enumerated power by which Congress may delegate any of its legislative authority to an executive agency. Therefore, agencies of the executive branch may not write rules that we citizens must obey, nor may they define penalties we must pay. If an executive agency wants a rule and a penalty, then it should suggest it to Congress, which would hold a public debate and a public vote and await a presidential signature. Failing that, no rules can be made that we the people must obey.
Except that the Feds don't see it that way, and they have better organized, better armed squads to enforce their point of view than I have.
Besides simplifying the rules, we must also simplify the bureaucratic process. What I want to do is give each business a single point of contact with "government". There could be entry points at all levels (local, state, federal, and possibly international), with each business forming an interface at a level suited to its operating scale. It would be like a person having a primary care physician to interface with medical care.
When some agency at some level decided that it wanted a piece of you, it would need to route its demand through your primary contact. When you need special attention from some other agency, your contact would refer you to one of its "specialists". Your primary contact would bear responsibility for notifying you of all of your business's bureaucratic obligations. In this way, your primary contact would front for all agencies, demanding all reports and taxes, signing you up for all necessary permits and licenses, and alerting you to all available benefits and services. You as a small business owner would always know whom to call when you have a problem. One need never worry that one has overlooked some other agency out there. Since having a competent interface would be important to a business, each should have considerable leeway to choose its primary contact person or office.
One effect of this unification would be that bureaucrats acting as primary contacts would become aware of contradictions among rules. One of their mission elements would be to resolve contradictions or escalate them rather than burdening their "clients" with them. Primary contacts would also become aware of the incomprehensible complexity of the sum total of all of the rules.
Part of my idea is to relieve business from culpability for obscure rules missed by its primary point of contact. Legislatures will therefore be motivated to reduce the rules to something a single point of contact can at least catalog even if the details can't be fully comprehended by one brain.
An opportunity would arise for consolidated reports and applications. Alternatively, since many government forms and reports require so much redundant information, if one's primary already has your answers to frequently asked questions, then many of your forms could be printed with such information already filled in by a computer.
Finally, your point of contact would grow to know your business's comprehensive needs, becoming familiar with more of your operation than would separate labor, tax, land, and licensing agencies. We can hope that such general knowledge would make the contact person more sympathetic to the unintended side effects of many regulations. At the very least, such confluence of communication streams should spare business people from having to explain the same circumstances to hundreds of scattered bureaucrats. Let one's primary contact person suffer that multiplicity.
We are, in many ways, by both public schools and popular culture, conditioned to the expectation that we will get jobs from mysterious (or inimical) others from whom to earn wages or salaries until we retire. It's as if business owners magically appeared from some other universe to hire us. It's very rare to see any models linking ourselves to any paths leading us to become those business owners.
I'd like to change that perception. Just as going to college was once viewed as a province of the elite but is now common and encouraged, I think that the American dream should be enlarged to include the realistic and achievable hope of one day becoming one's own boss. That doesn't mean that everyone has to strive for it, but that everyone should be presented with the idea that it's possible, that it's a choice to work for others, not fate.
To that end, we need to change education:
1) Every high school curriculum should include at least a kernel of how to start a business. Not necessarily a whole management course, but the bootstraps to know where to go and what questions to ask to learn more. All high school graduates should emerge with enough business orientation that they know they can run the gauntlet to start a business if and when they choose. Even if they never choose, at least they'll have some sympathy for those who do.
2) We must privatize K-12 education. It's very difficult to engender an expectation of capitalism while immersing young, impressionable minds in an environment of pure bureaucratic socialism.
The left wants to destroy capitalism by heaping laws and regulations upon it. The right, on the defensive, tends to compromise by carving out niches for the businesses that already exist. The combined result is a fortress with the privileged on the inside and the masses on the outside, and only a few people know how to get over, under, or through the barrier.
It's time for a new drive, one that doesn't just give new protection for those already on the inside, but sees the barrier from the point of view of the masses who feel locked out ... and brings them in from the cold. Rather than hurling more insults at those on the inside, I want to kick in the door, knock down the walls, and send everyone invitations to the party. To review, this strategy has three parts:
1) Kicking in the door: Demystify bureaucratic procedure by reducing points of contact, preferably to one.
2) Knocking down the walls: Reduce the number and complexity of the rules and taxes.
3) Sending invitations: Instill an new cultural expectation that capitalism is within anyone's grasp in part by educating all of our people on how and where to start should they ever choose.
When more people have a stake in the fun and profit, then more will support capitalism's continued existence and good health. For this reason, if nothing else, those already on the inside (or already knowing how to get in) should wise up and support my more egalitarian strategy just as enthusiastically as those who are on the outside hoping to get in.
Copyright 2003-2004 by Jeff Fisher: Permission is granted to reproduce this article in whole, but only in combination with attribution, the original title, the original URL, and this copyright notice.