Adam Smith, the Muir portrait at the Scottish National Gallery
by James C. Sherlock
We have chronicled here the broad and deep attacks on capitalism by the socialist and Marxist clerisy led by academics and their students in the media. The attacks are bitter and utterly relentless.
There is hopeful news.
PBS outlets all over the country yesterday published an article titled “The Unexpected Boom in Startups.” After the election it apparently is safe to publish such news.
Separately, the Census Department found that Virginia, year-over-year, in a week-to-week comparison with 2019, saw increases in 2020 in business applications of 44.5% (week 44), 38.7% (week 43), 32.7% (week 42) and 36.3% (week 41). Week 44 of 2020 was Monday, October 26 – Sunday, November 1.
Entirely unsurprisingly, the same Census Department report, when interrogated for regional results, showed the bulk of these gains were in the politically reddest regions of the country. New York, Washington and Oregon were in the 20% range. California 33%.
States of the old South like South Carolina (68.2% ), Georgia (62.4% ) Mississippi (89.6% ) and Louisiana (73.3% ) as well as Pennsylvania (61.2% ), Ohio(60.9% ) and Montana (83.3% ) have led the charge.
Newly majoritarian Democrats haven’t had time to ruin the business climate in Virginia, but they’re working on it.
For the record, new business starts in the Obama Administration increased less that 2% a year in his first term and less than 3% per year in the second. The first three years under President Trump new starts averaged a 9% increase each year.
The obvious question is to whom was this outpouring of capitalist animal spirits “unexpected.”
Answer: that same band of brothers and sisters of the left wing clerisy.
From the PBS article linked above.
America is currently experiencing what some are calling a “startup boom.” That’s right — even with a raging pandemic and an ugly recession, America is seeing a boom in the creation of new businesses.
John Haltiwanger, an economist at the University of Maryland, has been working with the U.S. Census Bureau to measure new business creation for decades. Every new business that hires workers, he says, has to apply for an employer identification number with the government, and when the coronavirus pandemic began, the data showed what you might expect: “We saw a collapse in new business applications,” Haltiwanger says. But then, about six weeks into the pandemic, the numbers started rising. At first, he says, they had to double-check that the data were correct: “We were, like, what’s going on here?”
And then the new business applications just kept rising. “The third quarter of 2020 is the highest quarter of applications we’ve ever seen,” Haltiwanger says (their quarterly data go back to 2004).
The same article offers the left’s excuse for this capitalist surge.
The largest area for new business creation is online retail. Of course, at the same time, we’ve seen a massacre for brick-and-mortar retail — and we don’t know yet whether these new businesses will fill the job void. Moreover, many of the new businesses are just people who were laid off and were forced to strike out on their own.
Creative destruction. Who could imagine such a thing?
The “just people who were laid off” comment is telling. It means that the author cannot imagine any other reason for starting a business.
How about Germany, the left’s favorite example of state-controlled industrial policy, at least among nominally capitalist countries.
Germany achieved (slightly lower unemployment than the U.S.) using a century-old program called Kurzarbeit, in which the government comes in and helps businesses pay their workers in order to keep the workers employed. We wrote about the benefits of Kurzarbeit back in April.
But Germany doesn’t look as hot as America when it comes to the creation of new businesses. And Kurzarbeit and other efforts to prop up existing businesses and prevent creative destruction may be a reason for this. “It is true that Germany has done a better job than the US at protecting *existing* jobs,” says economist Jens Suedekum of Heinrich Heine University Düsseldorf. “But one problem that will be with us in Germany for quite a long time is the low rate of new jobs that are being created.” Suedekum says this especially hurts young Germans and those workers who get Kurzarbeit benefits during the crisis but are laid off after the crisis.
That is followed by much discussion by the left that “the jury is still out.”
So, in a directly related question, what do local business leaders in the National Capitol Region want from the new administration?
The Washington Business Journal interviewed several of them in “What tops your wish list for the next president? D.C.-area business leaders weigh in.” The answers will prove an absolute mystery to the left:
Black business owner S. Kathryn Allen, co-president and owner, Answer Title: “Consistency and fairness in access to capital for minority-owned small businesses.”
Kevin Walsh, CFO, Century 21 New Millennium: “Strategic planning for our country’s next 50 years. Our deficit spending could cripple our positioning as the world’s No. 1 superpower. The Covid-19 $3 trillion economic rescue packages need to be paid for over time. Couple that with our unfunded long-term obligations as a nation and dark clouds are gathering. We need a leader with the foresight to start addressing these true system issues now.”
John Parker, president, Hutchinson Design Group: “Stabilization of our economy and reduction of the dependence and influence of big money.”
Black businessman Kevin Jennings, president and CEO, Millennium Corp.:“Bipartisan decisions between both houses and the White House to solve the many complex problems facing our country today. The national debt!”
Michelle Boggs, CEO, McKinley Marketing Partners: “Stimulus, maintaining existing tax structure and the continued dismantling of certain regulations.”
David M. Guernsey, president and CEO, Guernsey Inc.: “Control immigration. Don’t open the floodgates that would likely overwhelm our health care system, thus prolonging the effects of Covid-19.”
Debra Schiff, president and CEO, J Street Group LLC: “Stimulating the economy and jobs; providing financial assistance to those unemployed and Paycheck Protection Program to businesses suffering from the pandemic; tax cuts for the middle class; improving our existing health care policies; protecting women’s rights.”
David von Storch, president, Urban Adventure Cos. Inc.: “Helping those businesses that have been disproportionately affected by the pandemic — specifically restaurants, bars and clubs, travel and hospitality, fitness and local small retailers and entertainment.”
Ken Leiner, president, Ken Leiner Associates Inc.: “Health benefits for all Americans.”
Ryan A. Miller, executive vice president and market leader, Newmark Knight Frank: “Policies that directly support the growth of U.S. businesses, and our economy as a whole, which will restore confidence in the markets and spur innovation across industries.”
Mark Hottel, vice president, Harvey W. Hottel Inc.: “Keep the lower tax rates.”
Debbie Tang, partner, Bridge Partners: “I hope the next administration overturns the Executive Order on Combating Race and Sex Stereotyping. Hundreds of corporations and business groups have already encouraged President Trump to reverse this executive order. Diversity training is not ‘scapegoating.’ If corporations and their employees cannot have honest conversations about race, America will not progress.”
Note: Bridge Partners is a Diversity and Inclusion employee search firm.
The only “business leader” that the Washington Business Journal could find to offer a full throated endorsement of the left’s agenda was, unsurprisingly, a university President.
Patricia McGuire, president, Trinity Washington University: “We must restore DACA and improve the climate for immigration as a source of top intellectual talent and strength for our communities. We must also have a president who can address racial injustice, reject white supremacy and restore confidence in the president as the leader of all, and not just factions. The next president needs to fast-track real economic recovery through creation of jobs and restoring confidence in the federal government to be a strong and ethical partner in solving problems for communities. We need a president who works with governors rather than attacking them, who sees to it that benefits accrue equally across states rather than using federal funds as rewards for cronies.”
What now?
If there has ever been a clearer revelation of the difference between the cultural clerisy and those who try to make the businesses work for themselves, their families, their employees and their communities than the evidence deployed above, I have not seen it.
Now we get to see what a Biden administration will do with this good news. Another shutdown to teach these new small business owners a lesson? More regulations and higher taxes to strangle them?
Or will what’s left of the moderate in Mr. Biden recognize this as the main hope for the success of the economy and leave them alone either to prosper or to fail and be replaced by others with better ideas?
Or will Mr. Biden even have the personal bandwidth to notice?
We’ll see very soon.
