How big government crushes business
- April 6th, 2010
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OK so full disclosure, i’m a business administration guy who took probably too much econ to be impartial when it comes to regulations on business.
According to the Labor Department, small businesses employed more than half of the nation’s nonfarm jobs and accounted for 64% of the jobs generated between 1993 and the third quarter of 2008 (http://www.foxsmallbusinesscenter.com/finance/2009/12/28/did-big-banks-lend-small-business/).
The recent passage of the health bill is only going to hurt both small and large businesses by requiring them to pay more for health coverage for their employees. (see my rampage on health bill in earlier posts). This is another added cost to do business on top of the down turned economy, which has already raised their costs.
The credit crunch is making it more difficult for businesses to get credit. Without the surety of getting credit, they can’t fund business expansion. Most successful businesses rely on their revolving credit to make major purchases of equipment, repairs, and other large expenditures.
When businesses aren’t sure if they credit is going to be there due to new credit regulations imposed by the federal government, they hesitate to use current credit or open new lines of credit. This stifles expansion and new project create that could otherwise be more lucrative.
With all the rumblings in DC of cracking down on the “big banks” businesses are again afraid to make a move. More and more regulations on businesses handcuff what they are able to do to increase their bottom line earnings. Like it or not, that is the whole premise of business, to make money. Incorporated companies have stockholders they are accountable to, and it is their job to ethically make as much money as possible. If they can’t get the credit they need, have government mandated increases in costs of production, and other government imposed restrictions business will suffer.
Big banks like Bank of America, JP Morgan, Wells Fargo and Citi have lent over $31 billion in 2009. If the federal government steps in and starts imposing harder sanctions against banks, it is going to reduce their bottom line, which will reduce the amount of money they can lend. This ties up credit, which small businesses can’t get, which means less expansion, less money for the business, and the fewer full time employees they can hire.
The Montana Connection:
Sen. Tester is on the senate banking committee. I received a letter from him in response for my encouragement of limited financial form, basically stating he supports working with the Obama administration in creating more government regulation and sanctions against banking.
Sen. Baucus not surprisingly followed suit, essentially echoing those sentiments.
Those positions are going to hurt the expansion of mines, lumbermills, construction companies, and other small businesses that employ a majority of the Montana workforce. By choosing to side with the Democrats and the Statist regime in power they both have s chosen to ignore the well being of their Montana Constituents.
Again I urge you all to sign the petition recalling Sen. Baucus, and to join any for Tester.
Big business has never reacted well to government intrusion. Is some regulation based on facts necessary? Yes. Should the government over power business with those regulations? No. Look at the Soviet Union, they used centralized planning, and they completely fell apart.
Say no to Soviet style planning America.
