Capitalism dying. The fruits of Competition, innovation and individual opportunity are rotting under the strangling grip of corporate conglomerates, and small business lay in fallow fields of salted Earth.
This is something we all feel on a gut level, and know if we’ve been paying attention to the general slope of industry over the last 50 years. We understand the problem. But, who has the answers?
To hear most corporate Conservatives tell it, they do. And you might be inclined to believe it, considering how many billionaires and millionaires run for office, or support the party. Makes sense to trust the people who made it. Right? Sure, it does.
Unless they’re the competition.
I became evangelical about the cause of small business long ago; years before I ever considered running for office. When I was, in fact, more concerned with finding somewhere to sleep and a safe dumpster to eat out of than appealing to anyone for the sake of votes. Back then, in the mangroves of South Florida, I spent more time hunting iguanas than hunting for donors. You can read all about it here, if you’d like (A Tale of Two Islands — Homelessness, Hot Rod Hurricanes, and the Land Before Walmart).
Suffice it to say, my epic odyssey to the Isle of the Lotus Eaters taught me many things. Between changing tires and dodging scorpions, I spent hours considering the lessons this Economic Galapagos had to teach. It was here I came to understand first-hand two fundamental truths of economy:Small business brings money into communities; big business takes it out.
1. The Progressive cause is the cause of small business.
2. We are allies against common enemies.
In this article, we’ll discuss how the Progressive economic ideology aligns perfectly with the interests of small business…and why I, as an Industrial Progressive, stand firmly behind our common cause. Consider this advice from an ally…rather than from the competition.
Section 1 — Class Struggle; the Economic Theory of Industrial Progressives, and Restoring the American Dream
Section 2 — The Myth of Supply-Side Economics; Who’s Getting YOUR Money?
Section 3 — Small Business Job Creators; the “Inefficiency” is people! It’s PEOPLE!
Section 4 — Why Big Corporations Suck at Everything, but Keep Winning Anyway
Section 5 — Leveling the Playing Field; a Progressive Corporate Tax Structure
Conclusion — Industrial Progressive Platform
Section 1 — How the Garden Dies
Capitalism, as we understand it, isn’t a mighty forest. It isn’t something that just happens in the wild, and maintains itself through the invisible hand of self-regulation. Economies of individual opportunity are more like gardens; they require seeds of initiative, seasons of opportunity and the fertile soil of consumer demand. Our garden needs the benevolent sunlight of growth potential, and the irrigation of capital flow.
The budding chutes of small business require protection and attention, if they’re to overcome storms and drought to become mighty trees. Trees which bear the fruits of innovation and opportunity for all, and drop seeds for future generations to nourish.
Capitalism is a garden. And like any garden, it must be maintained…or taken over by weeds, and strangled to death.
This is something Adam Smith understood a long time ago when he wrote The Wealth of Nations; the foundational document of capitalism. Even 200 years ago, Smith warned against the rise of monopolies. Mega-coporations and the mega-rich, who would leverage their resource advantage to suck all the resources from smaller business. We’ve always known this was a flaw in the system; it just took a Great Depression to bother passing serious anti-trust laws to address it.
Unfortunately, due to the rise of global capitalism, especially in countries that either don’t have or don’t enforce those laws…weeds have spread to our garden. And the choking infestation of multinational conglomerates and publicly traded corporations continue to suck all of the nutrients from our soil. The consume the rain and block the light, giving no room for new growth, and no space to bear the fruits of every good thing capitalism has to offer.
Fact is, if we’re going to maintain capitalism in this new global economy, we’re going to need a complete rethink as to how we address its central flaw.
Otherwise, say goodbye to competition. Bye to innovation and individual opportunity. The garden of capitalism is dying from sheer neglect. And its only a matter of time before corporatism turns our fruitful fields into a brown and weed-choked wasteland.
We need a re-think of this system; where we stand in it, what we want it to accomplish and the problems inherent to it.
I submit we start with the following question:
What do We Want Capitalism to Do?
How we answer this question really depends on our priorities. If you only care about yourself, or you care about maintaining the system we work within.
Of course, that is a bit of a false choice. Because, if you’re a fan of John Nash (or at least, the A Beautiful Mind), you already know the right answer here. The individual profits most when they do what’s best for themselves, and the group. But, we can’t know what’s “best” for the group if we don’t know what we want it to accomplish. What’s our collective goal? What fruits do we desire our garden should bear? I’d say mostly these:
- Personal opportunity for wealth and career fulfillment
- Technological innovation
- Job creation at the maximum feasible wage
- Opportunities for future growth
These are the things we want capitalism to do for us. These are the promises Adam Smith made, and the promises made by every free market economist ever since.
And they’re fair promises. Because in isolation (or at least, in 1780), those were benefits of free market capitalism. Long before global conglomerates and the stock market, when businesses worked largely locally, free market economics did mostly deliver on these things.
But we’ll save that discussion for later. For now, let’s focus on those four objectives, and where we are today. Specifically, as it relates to the class struggle between Big Business and Small.
Section 2 — Class Struggle; the Economic Theory of Industrial Progressivism
I’m no Marxist, but it’s hard to deny: The class struggle between Workers and Owners is quite real. There is an eternal battle between the wage-earners and wage-payers, and the former will always lose without organization against the latter. That is true, and we’ve seen it play out time and time again. But, let’s zoom out a bit and examine this power dynamic on a larger stage. Starting with one simple thesis:
The same conflict exists between Big Business and Small, as between the Rich and the Poor.
Stepping back to the genesis of Progressivism, class struggle was once defined as the conflict between labor (the ones producing), and the owners of the means of production. Two centuries ago, that meant whoever owned the factory or the business the laborers worked for. But today, with large international corporations constantly snapping up the means of production, they have become the new upper class. At least in the corporate world.
The simple fact is that, since industry has gone global, those businesses which can take advantage of high-dollar contracts and foreign labor are the new “owner class.” They effectively own the means of production and distribution, and the prices of all are calibrated around them.
Worse, Big Business is openly malicious toward small. Unlike on the private stage, where billionaires simply horde wealth and workers suffer as a byproduct…Big Business actively attempts to destroy smaller competitors.
Because for humans, greed may be incidental. With corporations, it’s an absolute.
(Which, by the way, isn’t an attack on corporations. I intend to run a rather large company myself some day. It’s just an understanding of the nature of the beast. Corporate CEOs have a fiduciary responsibility to maximize profits for investors. Which means endless greed is the investor-driven corporation’s only reliable characteristic.)
What it comes down to is this: Take the incidental damage billionaires sometimes do to the poor, and make it a guarantee for small business. Which means what, exactly?
It means that the same Progressive model we use to benefit individuals in society can also be used to benefit the small business owners who employ them.
We can apply the same model of “wealth redistribution” from Big Business to Small as we do from Billionaire to Peasant.
And to much greater effect. First because the destruction of lower classes is active in industry, rather than passive. But mostly because small business generates wealth in communities, while Big Business takes it out.
So, in the same way that creating a broad consumer base in a consumerist economy stimulates the spending by creating more consumers…so creating a broader base of small business helps it by employing them.
So, when we talk about being “Industrial Progressives,” it means exactly that. Applying the same approaches of Progressivism to industry that we do to individual wealth. Starting with the understanding that more people with some money are better than a few people with a lot, we can get from theory to actual practices like Industrial Reform. Same Progressivism, different application. And one that I feel will do a lot more good than just giving everybody their check once a month.
The American dream is about opportunity…not just easy money.
Of course, all of this kind of assumes you’ve put aside the joke of “Trickle Down Economics.” But just in case you’re still clinging to the idea that it still works in the 21st Century…here’s a reality check.
Section 3 — The Myth of Supply-Side Economics; Who’s Getting YOUR Money?
Quick investment scenario. Don’t worry, you don’t have to be a stock broker for this one.
- Bernard offers you a chance to invest in American Consumers. For every $1 invested, you get $1,20 in return. You make $0.20 cents on every dollar invested.
- Donnie offers you a chance to put your money into Billionaire Corporation Inc. For every $1 you put in, you get $0.01 cent in return. So, for every dollar, you lose $0.99 cents.
Where’s your money going?
Do you want to make 20 cents, or lose 99 cents?
After a hundred years of study, we can say for a fact that this is the reality of trickle-down economics on a global stage. Yes, it is true that giving billionaires and profitable corporations your money does put some back into the economy. But it’s about 1% of what you’re giving away. So, where does the other 99% of your money go?
- Private bank accounts in the Caymans
- Stock buybacks
- Foreign investments
About the one place it doesn’t go is back into the American economy. Look no further than Trump’s most recent $2 Trillion for the wealthy. Just disappeared. Did nothing. No new manufacturing jobs, no massive improvement in the economy. No nothing. Because 99 percent of your money went into stock buybacks, foreign investments and bank accounts.
Now, compare that to Broker Bernard’s plan.
For better or worse, we live in a consumerist economy. An economy driven by consumers. It’s right there in the name. And what does that mean, in business terms?
It means that on the Supply-and-Demand graph, the limit is always demand. Apart from the rarest, most expensive and most luxurious of appliances, demand is almost always the limiting reactant in the chemistry of economy. That’s especially true for consumable goods, commodities and the things that most people buy. Which is almost all of where our production and ancillary supply goes. Very little of our economy consists or rare and luxury goods. The near entirety goes toward making things most people buy every day, or supplying the companies making those things.
Not to beat a dead horse, but it bears repeating:
In a consumerist economy, consumers set the limits. Not suppliers. Which throws a bit of cold water on the idea of “supply side economics.”
On the macro scale, supply doesn’t matter. Only demand, and the ability to pay for it.
That’s why Bernard’s investment in American Consumers reliably pays $0.20 on the dollar, while Donnie’s costs $0.99 cents. Because in a consumerist economy, consumers having money is the limiting reactant.
So…who’s getting your money?
Section 4 — Small Business Job Creators; the “Inefficiency” is people! It’s PEOPLE!
Now, that that’s behind us, let’s talk about about who really creates jobs in this country.
Short answer: YOU do!
And here’s why.
People make a lot of to-do about how efficiently big corporations can do things. And it is true that, from an Economy of Scale perspective, big corporations can be good at reducing cost for mass-produced products. Corporations are streamlined, run with minimal overhead, and have as few people doing as many jobs as possible.
Which is exactly the problem.
Apart from the fact that they don’t dump a lot of money into China or the Caymans, small business generates money in locally specifically because it isn’t as efficient. Because those inefficiencies are people. Small business has to employ more people to accomplish the same things as larger corporations. Let’s look at Walmart, because it’s my favorite example.
Walmart sells product to X amount of people. The store employs at any hour of the day, dividing by 2 for part-time employees:
- 1 Store Manager
- 2 Assistant Managers
- 3 dedicated cashiers
- 5 warehousers
- 5 floating associates
- 1 truck driver delivering goods
- 1 dispatcher directing them
That’s a total of 18 (full time) people this single Walmart store employs at any given hour of the day.
Now, let’s consider the number of people required for a corner store 1/5th the size, serving 1/5th as many people. Same hour of the day.
- 1 Manager
- 2 Cashiers
- 3 floor people/warehousers
- 1 truck driver
- 1 dispatcher
That’s 8 full time employees. Now, multiply by 5 to get an apples-to-apples employee count to walmart:
- 5 managers
- 10 cashiers
- 15 floor people/warehousers
- 5 truck drivers
- 5 dispatchers
In total, this “inefficient” small business adjusted for big-box scale employs 40 people, full-time. That’s twice as many as Walmart, serving the same number of customers.
And we find this pattern repeated all up and down the retail chain. It takes 60% more construction workers to build 5 small buildings than it does one big building. Those buildings pay 5 times more landlords, and more in property taxes. They pay more in transportation costs, maintenance and supply. They pay more for pest control, cleaning services, and more in terms of labor per individual for everything done there. They pay more people at more warehouses to load more trucks, and more drivers to deliver more boxes to more locations.
This is how small business creates jobs. And not just jobs, but higher paying jobs, all up and down the the chain. It’s also why seemingly every neighborhood Walmart enters immediately becomes a third-world hellhole. Because those “inefficiencies” corporations are constantly getting rid of are PEOPLE. Those are sales, stock, driving and construction jobs that will never exist. Because they don’t need to exist, because of the economy of scale in employment.
Small business creates jobs because it isn’t efficient.
That’s the point.
Small Business puts more money into the pockets of those consumers we need to keep our consumerist economy moving. That’s just a fact. We can talk all day about where those “efficiency gains” are going; Walmart will never charge substantially less than the same products sold across the street. That’s just bad business. Reality, those efficiency saving go the same place the same as tax breaks and bailouts: the Caymans, China and stock buybacks. Also the odd executive bonus.
Yes. Big corporations are efficient. Very efficient.
And that’s rarely a good thing for us.
Section 5 — Why Big Corporations Suck at Everything, but Keep Winning Anyway
A lot of this goes into deeper theory, and I’ve written plenty on it in the links below. But, to summarize:
Thanks to Macroeconomic Scaling, in our consumerist economy, big corporations don’t need to do anything particularly well to make money. They get bigger, just by virtue of being big already. Big Corporations enter into every transaction with an inherent resource advantage over Small. And when enough of them get together in an industry, they create an impenetrable wall of Infracompetitive interests. Thus, locking Small Business entirely out of the loop.
A few example that don’t require nine-syllable words:
- Jeff Bezos can afford to bribe congressmen to get tax cuts for Amazon. The corner store can’t.
- Walmart has the buying leverage to negotiate with Proctor & Gamble for lower prices on peanut butter. Mom and Pop’s Grocery Store doesn’t.
- American Towing has the money to bribe the mayor of Key Largo for city contracts. Jimmy’s towing doesn’t.
- Big S Transportation has 10,000 trucks, and its own shops to do all the work on them. Joe owns one truck, and has to pay full retail for turbo replacements.
The cold reality here is, the Myth of Corporate Parity is exactly that. A myth. It’s not a level playing field between Big Business and Small, because you’re not even playing the same game.
Just the same way billionaire trust fund babies enter society with a massive resource advantage, so big corporations enter every negotiation with one. This advantage always gives them greater leverage, and greater ability to drive smaller competitors out of business.
So, “efficiency” aside…once a corporation gets big enough, it doesn’t have to actually do anything particularly well. All it really has to do is leverage its size and power to greatest profitability.
Which is exactly the same thing we see happening between the rich and the poor. It’s precisely the same power dynamic. The same problem.
With the same solutions.
Section 6 — Leveling the Playing Field; a Progressive Corporate Tax Structure
Among other approaches in Industrial Reform, which will help us return to a small-business based “Carriage Economy,” the most direct and immediate route here is probably through taxation. Or rather, lack thereof.
Click on the link below to see my multi-tiered, fully Progressive base/minimum corporate tax plan. And yes, I’m working on the name. But the approach is solid. Tax different sizes and types of corporations at different rates, and make sure everyone pays their fair share. Pretty simple, really.
There’s just no getting around Macroeconomic scaling or “efficiency” rigging to destroy employment without putting some diminishing return on endless growth. To that end, I’ve created a tax plan that benefits the smallest companies the most, and gives the greatest hand up to those contributing the most to our local communities. My aim is to put the smallest businesses in America into toe-to-toe competition with the largest. Click on the link for more a deeper dive.
Saving the Garden — Our Industrial Progressive Platform
- Personal opportunity for wealth and career fulfillment
- Technological innovation
- Job creation at the maximum feasible wage
- Opportunities for future growth
These are the four things we want capitalism to give us. This is the fruit of our garden. Anything that furthers these goals is on the Industrial Progressive platform. But here are a few of our more specific aims:
- Broadening our economic base through diversification of production, retail and ownership
- Unifying smaller interests against larger ones, restoring the power balance to the most productive members of society.
- Focusing our efforts on policy which benefits the American people directly, instead of benefiting those already on top and hoping for some “trickle down.”
- Directing the growth of industry and wealth locally, instead of internationally.
- Distributing the maximum amount of business to the maximum number of people, creating a stable, sustainable economy of opportunity for all.
These are our principles. These are our approaches. And these are the reasons why we see small business as not just an ally in our fight to regain power for Americans, but intrinsic to it. Because local business is us.
Capitalism is not a mighty forest. It is not eternal, or self-regulating. It doesn’t maintain itself, or bear the fruits we want unless we make it happen. Left to its own devices, the garden of capitalism will consume itself until all that’s left is a barren lot were nothing but sand and weeds may thrive. If we hope to save this system for ourselves and future generations, it’s going to take an alliance between small business and progressives, in a fight to end the strangling infestation of global corporatism.
Because we’re in the same struggle. We fight the same fight, for the same people, against the same things. The Progressive cause is the cause of small business, private entrepreneurs and those budding innovators reaching for their share of sunlight amid the weeds.
Our fight is your fight. Our goals are yours. And your gain is ours.
Please join us today, and show your support. Industrial Progressives fight for the fruits of opportunity; against these fallow fields, and for the growth of generations to come.
This is everyone’s garden, after all.
Find us on Facebook at http://www.facebook.com/Roweforcongress/ or visit us on Twitter @ReforgeAmerica. Or, you can contact us directly via email at email@example.com.