The Jobs Bill

Since I am a big proponent of entrepreneurism, I thought it might make sense to give my opinion of the Presidents jobs bill ideas. Now keep in mind, the bill has not been written yet. So the final bill might not have all the parts in it that are currently being proposed. Based on the big three issues, here is my take:

1. Tax Credit of $5,000 per New Employee: This would be fantastic for creating new jobs. Any business would take advantage of this if they could. However, the is a real issue with fraud and abuse. What happens if someone just shuts down one LLC and starts up another one under a different name thereby firing and re-hiring everyone on staff? How this is worked out, remains to be seen. If they can fix the fraud question, then you are likely to see serious job creation this year. 

2. No Capital Gains Taxes for Small Businesses: This to my mind (and experience) would not really be stimulative. A business has capital gains when they sell something for more than what it is shown on their books. For instance, if you have a pickup truck that is fully depreciated and you sell it for $1,000 then you have a capital gain of $1,000. I guess this would reduce the cost of replacing older equipment with newer stuff. That would kinda be stimulative. But the problem is that sometimes you might just sell the truck and not replace it since you laid off the guys who would drive it. The tax reduction is only helpful if people really see the correlation. If it is complex, like capital gains taxes, most won't even know about it and therefore they would not make the actions you want them to make (sell the old truck and buy a new one.)

3. Increase Lending to Small Businesses: This is huge. Right now, the only way to get new money (not loan renewals) is to get a federal guarantee. The feds (SBA, Stimulus and USDA) only have so many people on staff to review all this stuff. That means that there is currently a serious backlog in the lending and borrowing. I know plenty of businesses that could get going if they could just get the money. Increasing the lending is going to be key, but then you need to figure out how to back the feds out of the lending relationships so it will go back to banks and entrepreneurs. Once you are on the i.v. it is hard to get off. 

The American Entrepreneur

We have all heard about the American Business Hero. You know, the one who goes out, risks it all and creates a new business. You can name some of the names: Ford, Edison, Jobs, Gates. These guys, in the beginning were pioneers who reached out to make the better mouse trap. In doing so, they made themselves very wealthy.

However, along the way something happened. Something changed in who they were and what they were doing. In the end, it was no longer them, but the company that had control. They had each created a monster. Today, there are many very large monsters lumbering about the country feeding at will and leaving a wake of destruction behind them. Doubt it? Here is a short list: Enron, AIG, Northern Rock, Walmart.

All of these companies have become so large that they no longer represent the personality or wishes of a single founder. These companies are now mostly run by hired guns who are experts at process, reporting procedures, hierarchy structures and financial manipulation. They are filled with average workers (no free-thinkers except on corporate retreats, please) who do an average job managing an average product for the average consumer. Not too hot, and not too cold.

The shareholder is just a nuisance to these companies. Once a year, they hold an annual shareholder's meeting in some hotel and there the average titans are forced to listen to the average shareholders bitch about their less than average returns. Of course, the company will pay lip service to the shareholders, who ostensibly own the company. Of course, no single shareholder has enough shares to do anything serious about it.

So the average company is very average indeed. Even the self-appointed kings of the boardroom are very average. Their main goal is to move the ship without too much list or lean in the cargo area. Or in other terms, don't rock the boat baby. They accomplish this by creating a system where no single decision can be made by any single person. As a result, you must make all decisions as a group, committee, board or up the chain of command.

None of this is new, of course. This is bureaucracy: a system of management that allows average people to perform averagely.

Juxtapose this with the concept of the American Entrepreneur. In the beginning, Bill Gates did not create a company that would try to monopolize markets, instead, he wanted to make some money which would help him get laid. When Henry Ford started, he wouldn't have formed a committee to see at what point he should recall a dangerously flawed vehicle or not.

In our society, we honor the individual who starts a business. However, we do not separate that individual out of the company as the company become a giant bureaucracy.

So to the point: It is my belief that the individual will be returning to the American landscape. We will see more entrepreneurs emerging from their corporate cubicles of mediocre malaise and walking into the bright sunshine of risk and reward. Twenty-Ten will have more business startups than we have seen since 1999 during the dot-com breakout.

Why? Well, first it will be out of necessity. Those big companies are all smaller in staff now. They cut their staff down last year. It will take a little while before they bloat back up. Secondly, people will find that all the tools needed to start a business are right at their finger tips.  Third, the recent collapse of some markets will open opportunities for new debutants.

So break out those spreadsheets. Start working on that business plan. Seek out the answers to your questions and then execute. People will try to dissuade you from doing it, but press on. You know that deep inside you want to be a little above average. The average person always wants to be above average, don't they?