Part Three: Forming an Alliance with the Minority Entrepreneur

Connie Evans solutions to grow businesses include, “Investors, policymakers, and entrepreneurship organizations must also find ways to develop and fund vocational training for students and adults that assists with business start-up and continuing education credentialing, licensure, and degrees. New sustainable systems must be created to provide support and mentoring to Main Street businesses. Solutions like these can only serve to maximize the potential of black-owned businesses not just for success but for exponential growth.” (1)

Today, 29% of jobs require a government license which is nearly three times that of 40 years ago and these licensing requirements slows down business growth. A report in the Kauffman Foundation noticed, “High rates of new business creation are a sign of a dynamic economy in which the barriers to entrepreneurship are low. As entrepreneurs bring new ideas to market, they spur economic growth and create jobs. In fact, companies less than five years old are the primary source of net new job creation in the United States…Yet, in certain fields and professions, the path to opening a new business is marked with barriers that can slow or even block entrepreneurs. These barriers often go unnoticed until the entrepreneur runs up against them. Such is the case with one form of government regulation known as licensing, which has the effect of fencing out new entrants while protecting the licensed from competition.” (2)

Licensing often begins at the state level and creates labor market inefficiencies with regulations that do little to protect public safety. Jobs requiring licensing in some states includes tour guides, selling caskets or braiding hair. These licensing restrict entry into these markets, with fewer practitioners in these fields means more money for those working but zero for those who aren’t allowed to join those markets.

While the main claim is that public is being protected with higher quality, in one state, there were no differences in consumer complaints between licensed interior designers and certified interior designers. Licensing boards can restrict innovations in training, education and even in the delivery of services including preventing low-cost legal clinics or prepaid health care and this raise prices for consumers while keeping out competition.

Another problem is that many state licensing boards don’t allow licenses to be reciprocated and this restricts the ability of workers to move to different markets where their skills can be useful or there is a bigger market for them. These licensing requirements can be a hurdle for those seeking upward economic mobility. Minority businesses concentrate in the service industries just as good repairs, child care, hair salons and taxi services and many of these businesses are negatively impacted by state licensing. Minority businesses are finding out through regulations and taxes, government is not their friend but providing the obstacles interfering with their mobility.

Americas Majority Foundation conducted national polls after both the 2014 congressional elections and the 2016 elections including questions dealing with economic visions. In their post–election national Polls in 2014, 61% of white voters opposed increased government spending as being good for the economy along with 53% of Hispanic voters. Only black voters’ support government spending as being good for the economy but nearly 41% of blacks joined the majority of white voters and Hispanic voters in opposing Keynesian economics. (Subsequent polls that majority of black voters actually oppose the idea that increase spending does indeed help the economy.) In our 2016 post-election polls, one national poll voters conducted by Voice Broadcasting continued to reject Keynesian economics on steroids. Only 15.4% of voters believe additional government spending will help the economy whereas 67.4% believe it will hurt the economy 16 with the rest unsure. Even Democrats questioned additional spending as only 23% supported along with 14% Independents and 7% Republicans. 52% Democrats, 83% Republicans and 68% Independents viewed increasing government spending as hurting the economy. 15% white, 19% black, 21% Asians and 11% Hispanics supported the notion that additional government spending helped the economy whereas 69% white voters, 55% blacks 48% Asians and 67% of Hispanics accept the notion that increase spending hurts the economy

In a second national poll conducted by Cyngal we saw similar data when it comes to rejecting Keynesian economics on steroids as 17% voters believed in additional government spending aiding the economy whereas 66% viewed additional government spending as a negative with the rest unsure. 8.5% Republicans, 26.5% Democrats and 17% Independents view government spending as helping the economy whereas 80% Republicans, 51% Democrats and 66% Independents opposed the idea that additional government spending would help the economy with the rest unsure. 17% whites, 21% blacks, 15% Asians and 20% Hispanics support the idea of increasing government spending as a method of helping the economy to grow whereas 67% whites, 56% blacks, 57% Hispanics and 67% Asians view increased government spending as harming the economy with the rest unsure. (3)

Across the board, voters stated they preferred policies that encourage economic growth and increase economic opportunities over dealing with inequality. Regardless of gender or race, three out of four Americans preferred economic opportunities and job creation over dealing with inequality. Other pollsters have seen this as well. Rasmussen found that voters preferred growth over “fairness” by a 53% to 38% margin and Democratic Pollsters have found similar data. Global Strategy Group, a Democratic polling group concluded, “More than three quarter of voters (78%) believe promoting agenda of economic growth that benefits all Americans should be a very important priority for Congress, and a majority (53%) believes such an agenda is extremely important.” John Judis warned his fellow Democrats about pursuing an inequality strategy that can fail at forming a majority, “Unless they can shape their campaign for economic equality so that voters- fearful of big government, worried about new taxes, skeptical about programs they think are intended to aid someone else- are willing to sign on.” Growth trumps redistribution even among Democrats who in our polls favored growth by a 63% to 37% margin prior to 2014 election. With growth comes expansion of the private sector and the majority of voters agree that when the private sector grows so does the opportunity to succeed.

In the Voice Broadcasting national poll, 70% of voters favored job creation over reducing inequality with 87% Republicans, 67% and even 57% of Democrats favoring increased economic opportunities over worrying about inequality whereas 21% favored dealing with inequality. 71% of white and black voters along with 70% and 59% of Asians favoring job creation as the end results of economic policies.

In the Cyngal national poll, 67% of voters favored job creation whereas 26% viewed inequality as the primary endpoint of economic policies. 84% Republicans, 64% Independents and 54% Democrats wanted economic policies to favor job creation whereas only 9% Republicans, 31% Independents and 41% of Democrats viewed inequality as the endpoint of economic policies. 67% whites, 68% blacks and Hispanics and 75% of Asians favored job creation as the endpoint of economic policies. This was seen in our battleground states surveys as voters wanted economic policies to focus on job opportunities. (4)

Both black and Hispanics in both polls rejected Keynesian economics and the politics of envy as they want economic growth over dealing with inequality. For Republicans and conservatives, it is time to design policies that aid economic growth among minorities.

During the early part of this century, one method was to encourage home ownership but government policies encouraged loans to many minorities who were not qualified for their loans and many minorities not only lost their homes but their wealth. After the Recession, 35% of blacks and 31% of Hispanics households had zero or negative growth, significant increases from four years early. Home equity of Hispanics homes went from slightly under 100,000 dollars in 2005 to 49,000 dollars in 2009 and black households saw their home equity go from 77,000 dollars in 2005 to 59,000 dollars in 2009 along with seeing the percentage of homeowners dropped. (5)

The housing crisis helped significantly reduce the wealth of many minorities and this led to the reduction of the investor class among minorities as many used their 401 k to bail out their drop in income while becoming unable to save and replenish their monetary savings. The initial goal is to encourage entrepreneurship and later, revising the investor class strategy with ideal of creating capitalists again throughout America and in the minority communities

Going into this century, many Americans owned part of America and the data showed that investors were more likely to vote Republican and support free market ideas but the housing crisis reduced the wealth of many Americans. Many middle-class and minorities saw their wealth disappear and the housing crisis saw many moving up the economic ladder slip back down.

It shouldn’t be surprising that support for free market ideas has slipped as many Americans have lost their wealth and their homes, while selling their portion of their 401 K to survive the downturn. Many middle-class including many within minority emerging middle-class not only saw stagnant income but saw their overall wealth decline. It is no coincidence that when America saw a decline in economic freedom and an increase in government interventionist policies, the average America saw their income decline. Heritage Foundation index of economic freedom tells the story of the century as America went from free to mostly free and now ranks number 17 on the economic freedom scale and this has corresponded the weakest recovery in which we saw the Obama Administration go through entire eight years without one year of 3% of growth or more, something not seen since the Herbert Hoover Administration. (6) Under the Obama years, the number of Americans needing food stamps or slipping back into poverty increased during Obama’s recovery! Reagan’s recovery during the 1980’s proved to be stronger and longer lasting than what the Obama is proving to be as the Obama recovery has left many behind. (7)

Lee Edwards noted, “Perhaps most important of all, he (Reagan) created IRAs (individual retirement accounts) and 401(k) programs, giving birth to what has been called “the investor class.” New industries arose in computing, software, communications, and the Internet that streamlined and transformed the American economy.” (8) Reagan created the investor class and Obama created the dependency class.

ALEC ratings of state competitiveness showed that the majority of states in the top ten came from Red States whereas many major blue states like California, Illinois and New York populate the bottom of the lists. (9) States that have lower taxes, less burdensome regulations and keep spending in line produced better economic growth and more opportunity. Many minority entrepreneurs suffer from government regulation that reduced entry into various businesses and higher taxes takes profits needed to grow the economy. Dodd-Frank has reduced lending for many small businesses and this has hurt the growth of entrepreneurship. American Enterprise Institute Peter Wallison noted in a speech, “New community banks are not being formed. We used to have about 100 new banks starting every year; now we have about three, and in some years we’ve had one. Thus, there is a huge disparity now between the health of the small-bank sector before the financial crisis and today. If the small-bank sector.”(10) Another American Enterprise Institute scholar Paul Kupiec added these data, “Regulatory data indicate that, in 2008, the 8,345 banks with less than $10 billion in assets supplied $388.8 billion in small business loans. By 2016, only 5,954 of these banks remained, providing $308.4 billion in small business credit. The demise of nearly 2,400 small banks, along with the regulatory burden of Dodd-Frank on surviving small institutions, coincides with a 21 percent decline in community bank small business lending.” (11)

Government regulations are denying entry into the market place and reduce lending to many small businesses including minority businesses. Reducing both entry regulations by reducing licensing requirements and overturning Dodd-Frank will enhance entrepreneurship among minorities, creating both jobs and opportunities for upward mobility. It will create wealth and allow wealth to expand through the community. Conservatives and Republicans must encourage the formation of the investor class to ensure that wealth is not only created but that Americans will have something for their retirement and putting less pressure on social security in the future while allowing increase investment in America.

With the rise of Populism, Republicans are concentrating less on the investor class and the entrepreneurs but by emphasizing the investor class and improving climate for entrepreneurs, Populism becomes less about increasing government services for the middle-class and more on developing growth. Final words for Republicans and conservatives, create capitalists and you create capitalism supporters.

Footnotes
1.Black entrepreneurs are the key to reducing wealth by Connie Evans, Huffington Post May 4, 2017
2. http://www.kauffman.org/what-we-do/resources/entrepreneurship-policy-digest/occupational-licensing-a-barrier-to-entrepreneurship
3.Americas Majority Foundation report Winning in 2016 and Moving Forward toward 2018 by Tom Donelson
4. Americas Majority Foundation Report Winning in 2016 and Moving Forward toward 2018 by Tom Donelson
5. Wealth Gaps Rise to Record Highs Between Whites, Blacks and Hispanics July 26, 2011 Pew Research Group.
6. 2017 Index of Economic Freedom Index Heritage Foundation.
7.Hey President Obama, The economy is Still Weak for most America Heritage Foundation by Stephen Moore February 25, 2016
8. Dismantling Liberal Myths, Refreshing Course on Ronald Reagan by Lee Edwards June 5th 2014.
9. Rich States Poor State 2017 ALEC.
10. How Dodd-Frank Damaged Community Banks and Hurt Small Businesses by Peter Wallison speech Center For American Experiment May 5, 2016
11. Why We Must Base Banking Regulations on Real Data by Paul Kuepic.