Small business: walking on eggs but standing tall
Boston — Arthur Levitt Jr., chairman of the White House Commission on Small Business, has put together a long list of "horror stories" about the effect of "insane" government regulation on small companies.
For instance, he tells of a one-man business required to install a two-way radio system.
Then there was the woman in Portland, Ore., who had been making gourmet jellies at home most of her life for sale to the city's finer stores. She would have to install a kitchen separate from her home, the Department of Agriculture said. She couldn't afford to do that.
An 11-year-old boy in Roseland, N.J., was selling doughnuts to motorists lined up for gasoline. "The state and the feds shut him down," said Mr. Levitt, who is also chief executive of the American Stock Exchange. The feds said he owed 22 cents in taxes. The state Department of Health said he had no permit. His father figured it would cost $1,000 to hire lawyers to sort the mess out.
A baker in New York city was required by federal regulation to have one egg per product, while state law required two.
Mr. Levitt was speaking from memory. He might not have had all his facts straight or heard both sides of these stories. Whatever, practically any small-business person can cite some crazy instance of over-zealous or foolish regulation or excessive paper work that has hurt his or her business. It is the biggest complaint small business has, the Amex chairman says.
During the past 19 months since appointment of the White House commission, Mr. Levitt has spoken literally to thousands of small entrepreneurs. He comments: "They are the most interesting, challenging, patriotic, fascinating people I have met in business. I like their impatience, their sense of challenge, their willingness to work to overcome all obstacles. This country has lost some of its taste for risk. But these people can't afford not to take risk."
He tells of visiting President Carter with a group of top executives of the nation's largest companies. They were restrained and respectful in their conversation with the President. Then he took a bunch of small-business men to the White House and was delighted to watch their bluntness and openness in talking with Mr. Carter.
Small business also is important to the nation's economy. Mr. Levitt presented his commission's report to Mr. Carter May 15 and it noted such facts as these about the small-business community:
* It represents 97 percent of all US companies.
* It provides livelihoods for 100 million Americans.
* It generates nearly 87 percent of new private-sector jobs.
* It accounts for approximately 40 percent of the nation's total output of goods and services. (In 1945, however, that share was 55 percent.)
* It has produced more than 50 percent of the major innovations in the contemporary life, such as Xerography, DDT, the zipper, automatic transmissions, jet engines, the helicopter, Kodachrome, air conditioning, the Polaroid camera, the ball-point pen, and so on.
Moreover, there appears to be some revival in small business, though the current recession may reverse that. The report begins:
"There is a tide in the spirit of individual enterprise in America, and it is rising.
"More and more Americans are eager to start small, independent businesses. More and more are deciding that only through ventures of their own can they achieve the kind and quality of life that they envision. According to Dun & Bradstreet, 477,827 new businesses were incorporated in 1978, and late in 1979 the annual rate was running at more then 520,000 -- 63 percent greater than the number of new incorporations five years before.
"In those same five years, the number of self-employed Americans tabulated by the Bureau of Labor Statistics leaped nearly a million to 6.6 million -- reversing a trend that had been down or flat for the better part of a century."
The 10-man commission noted that this shift is "only in its infancy," but that it represents "a renaissance among Americans of self-confidence, resourcefulness, and risk-taking."
In fact, the related White House Conference on Small Business in January, with some 1,682 delegates, showed that small-business people feel postwar economic policy has been, largely through inadvertence, tilted against them.
"Government in recent decades," states the report, "has tended to view Americans as employees and consumers rather than as entrepreneurs and producers, a philosophy of collectivism at the expense of individualism."
More specifically, they complain that the tax code, accounting principles, credit policies, procurement practices, export incentives, even business-school programs, have all evolved over the years to favor big business rather than small business.
The White House conference made 60 specific recommendations for improving government policy for small business. They include reducing taxes, trimming regulation, improving credit availability, and encouraging exports.
Mr. Levitt admits that some of these proposals have little hope of receiving White House or congressional approval. Nonetheless, with the introduction in Congress of a dozen or so bills adopting some recommendations, and with hearings scheduled on the issues, he expects action on at least some of the less costly suggestions.
Moreover, he adds, the White House conference and numerous regional conferences have given a rebirth to small business organizations around the nation. "these could be the strongest lobby in the economic history of the nation," he figures.
In other words, the political muscle of small business isn't so small.