Small Businesses An Essential Part of a Proper Democracy


In present world business is an essential part of many countrys economies. Starting in the late nineteenth century business has elevated to an unthinkable heights in a matter of several decades. Industrial revolution triggered the beginning of 'business' as it is known today. It may be not a directly related to the 'start of business, but played a key role in development of the global business world. Mass production of a vast variety of goods produced in the most advanced countries at the time as USA, England and France required a deferent approach in order to progress and transform to a new type of society. Many challenges occurred when a great power of industry started to fulfill its potential. Consider the following: reaching goods to the consumer, who operates these factories under a limited governmental influence, quality control, profit distribution, etc. With some of governments cooperation and individual innovation many of these concerns were resolved in the twentieth century. By the mid-twentieth century USA had really picked up some pace in its economic growth, WWII being a major cause, after which many factories that produced goods necessary for the war now were converted into a production of cars, planes, tools and other products for civilians. Soon US was overpowering their previous economic rivalry England. Enormous resources, growing population, innovative minds, land availability and lack of powerful neighbors made USA an ultimate place for business to flourish. Business world was divided into a small, mid-sized and large companies also called corporations. In the 1980-s till mind 90-s USA transported a vast amounts of their production to many of the industrially growing third world countries, China being a major one of them. During that period country's economy was shifted from the primarily industrial, to a service based economy. Twenty first century made globalization of corporations even more rapid and effective due to many technological advancements. Internet along with few others technological breakthroughs transformed this world into a global community with a fast paced information flow. This type of progress is very promising, but contains an intimidating element to it. Growth of the corporations comes in such extent that a company's profit and power might be a hazard to society and its prosperity. Today many small business owners are facing difficult situations. Taxes, restrictions and well established powers possessed by corporations are too great for small business healthy existence. Recent policies and laws passed by the government have created an uneasy environment for a small and mid-size businesses. Let's not forget that US is famous for its economic freedoms, and these freedoms might face an enormous threat in the following decades. Free market economy in the United States is under a big question mark. A corporation has many obvious advantages in profit growth; a company that orders a high volume of products gets them for a lower rate compared to a business that only buys a low volume of goods. If an individual can't realistically run a small business and possess his or her own client base due to overpowered competition then country is under threat of heaving duopoly, where majority of population involved in a low-level service jobs. AT&T v Verizon, Pepsi v Coca-Cola, Microsoft v Apple, Chevron v Exxon Mobil, Nike v Adidas, Wal-Mart v virtually all grocery stores in US. This type of business environment can not in itself resemble any of the fundamental democratic principles.

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Legal system along with constitution influence US business environment. Laws are a crucial part to the whole system, since these laws and policies are generally obeyed and enforced. Violation of laws are very consequential and often time result business to be fined, shut down or a guilty individual may face a sentence in prison. US constitution contains several points that have a great effect on business world and correlations between business and government. Section 8. Clause 1. "The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States." Which interprets to Congress ability to influence a business by imposing taxes on certain products, services or businesses. Tobacco and alcohol manufacturers are influenced by the government increase in sales tax for these products (Cornell 1). Amendment V "No person shall be …nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation" (Cornell 1). This amendment effects and protects business. For example, a business building that has to be destroyed due to contraction of the new highway, the government must be responsible in insuring that they have covered all of the inconvenience caused, bought an equally valuable building with the similar location and paid the workers of that business for the period they were unable to work (Cornell 1). Amendment IV. "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized" (Cornell 1). This amendment creates an enormous loophole, if a business runs successfully by exercising illegal activities it can manage to function unpunished. The reason for this can be inability to provide a solid ground of reasoning to get a warrant in order pursue a further investigation and find certain evidence to punish the unlawful. The Commerce Clause refers to Article 1, Section 8, Clause 3 of the U.S. Constitution, which gives Congress the power "to regulate commerce with foreign nations, and among the several states, and with the Indian tribes" (Cornell 1). Supreme Court rulings also deliver a great impact on businesses in the United States. Supreme Court ruling McCulloch v. Maryland established national supremacy, which is one of a few steps of the United States took in solidifying powers of the national government after its initial creation. This ruling unable states to tax federal institutions, caused by Maryland taxation of the US Bank (Landmark 1). Kelo v. City of New London is extremely controversial case, the ruling made it possible for corporations to take away private land if government thinks it is good for the public (Rutkow 3). But what does for the "public good" really means? Lets imagine a major store that sells a brought variety if goods for low prices comes into a small town. This store can take away someone's private land along with their house, as long as this store demonstrates that they can benefit the public, which usually means tax revenues for the government and an illusive job creation. Illusive because often times this chain causes small businesses of the surrounding area to lose its clients and go bankrupt, therefore, people who lose their job in the local business are forced to work for this chain. An individual today can not be certain that his or her real estate is secure. Labors laws impact businesses the most because they dictate how businesses are run, their daily productivity, and expenditures. Federal labor laws protect the interest of employees by setting strict standards for organizations to follow. Regulations schedule breaks, wages, safe working conditions, unemployment insurance. Forty hour week for example is something that is being manipulated with today, seeming to be a straight-forward law forty hour week is a subject of change. Many business dominantly corporations create such positions that work on commission, many managers from small positions to CEO's are subjected to that policy, this is considered to motivate a worker. For example when one gets paid based on the percentage of sales, forcing worker to work as long as necessary to meet a profit margin to satisfy company's requirement. As an average car sales man at the car dealership works more than sixty hours a week, sometimes even eighty, and during that period he can make no money whatsoever. Does this sound like forty hours, and where is overtime? Ability of corporations to hire top class lawyers, sociologists, accountants not only makes them superior to an average business owner, but as shown allows corporations to bend the laws as much as they can, for their own benefit. As shown United States Constitution along with federal regulations have a great influence over a vast variety of business operations. Immigration laws that prohibit employment of undocumented workers and punish businesses that practice that activity. This also is something corporations tend to do to cut down the costs, McDonalds having a thousands of franchises, makes them almost impossible to monitor. Today when one goes to a fast food place it often times consist of Hispanic crew, which is likely not be documented, where a couple decades ago same positions were occupied by the American school kids. Since most of the corporations are profit driven they will do whatever it takes to increase these profits and cut down the costs. The laws dictate working conditions, hours employees can work, and federal standards for minimum wage are set. Most importantly, labor laws protect the interest of the future generation by enforcing age restrictions that would interfere with the development of children. Federal laws are designed to be fair and balanced to protect the interest of businesses and legal employees (Myers 1). But the law has no power unless it is properly and justly implied. Justly that is the most challenging task to achieve. Making sure that any type of business of any size is justly treated throughout United States is a challenging task that has a great element of difficulty in it. There are moves from the United States government that intend to help small business, such as low interest rates on business loans, lower taxes that are implied in certain times. In the case of 2008 bubble many small businesses took a strong hit, but the biggest challenge is for them to pick up some pace, and that has not happened yet. Despite government attempts, low confidence amongst consumers makes creation of new business absurd in many cases. Majority of the nation has a very poor credit history to be able to get any loans. The economic situation since 2008 have not been healthy enough for small business owners to successfully continue their task, nor for the American citizens to start their own businesses with a chance of reward. Annual cost of Federal regulations paid by a small firm (fewer than twenty employers) is $10,585, Large firm with over 500 employers pays only $7,755. Very small firms spend four and a half times as much per employee to comply with environmental regulations and three times more per employee on tax compliance than their largest counterparts (SBA 1). The figures above demonstrate an evident disadvantage Federal regulations create for a small business, which makes this matter absurd considering that profit margin and expense are higher for a 'small fish'. Consider this in 2005 644,122 businesses were created and 565,745 were closed along with 39,201 bankruptcies. In 2009 552,600 businesses were created and 660,900 were closed, 60,837 bankrupt. More than 100,000 business less were created in year 2009 compared to 2005, also more than 100,000 businesses were closed that year. More businesses were closed than created in 2009 making an estimated 250,000 less than in 2005. The following figures are overwhelmingly convincing. Government has not being able to even sustain economic environment in the last several year, not mentioning the word improve. Positive changes amongst many of US policies(elimination of some of them) and laws are needed to recreate a rewarding habitat for small business owners in the United States.

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Federalism is an fundamental value to the United States. The Founding Fathers created an effective way of governing a vast country with many different cultures and beliefs combined together. In the past century up to today federalism is declining due to globalization that present society presents. Interment and television created a nation that has much more in common compared to nineteenth century for instance. This matter in itself is very ambivalent. Common ideas and beliefs are valuable, but retention of unique identity that every location in United States presented is enormously important too. From construction of housing to what type of music is popular is becoming more of the same throughout modern times. Small business represents a federalism in the present world. Each of these businesses has its own customer service, products, workers and policies. This type of business retains a unique geographical(local) value to it. For example a restaurant is San Francisco may be famous for its sea food, whether restaurant in Texas may be famous for its local beef. All around small business preserves values of local community involving its owner(s), employer and its consumers. This type of freedom is not only essential part of American tradition, but an essential tool that keeps middle class on float, as well as preserves countless important values for the future generations. Corporation from that perspective provides none of those values, having its factories overseas where citizens of other countries work in inhumane conditions. This type of strategy created no positive outcomes in the long run. From mid-nineteen forties to nineteen-ninetieths United States had a much solider economic ground do to manufacturing and a high volume of export. In the present day import is extremely high, export is low. Please note that in 1950-s US gave Japan tremendous help to rebuild and during that time the country was highly industrial. Today the National Dept is rising to incomprehensible figures. Why did this happened? When profit hungry companies saw the opportunity to produce goods dramatically cheaper, they eliminated most of US industrial power, leaving only a few industries domestic, like passenger plane production. Free market economy is a fundamental value to the United states, but not only central government gained much more power since its creation, it has also created misleading image of its limited interference. After shifting much manufacturing to other countries, self-sufficiency of the US dramatically dropped. This is a dramatic issue that may be very hurtful in the future if already is not, therefore it almost elevates not only to the levels of future economic prosperity, but to an issue of national security. In this case supplier like China is only growing because of US consumption, on the other hand leaving US as a looser in the long run. Monitoring and controlling activities like this one is more important than imposing new taxes. Since self sufficiency is part of the term freedom, and government primary task is to insure just that, how American citizens allowed such a great component to escape. Environmental movement perhaps, but with control and technologies pollution of factories can be minimized to a great extent. Consider this, our planet is a unit, its environment is united, by letting 'others' pollute atmosphere oceans away with much less environmental control and awareness, only multiplies environmental pollution. Furthermore US now has transformed to economy that resembles a variety of services, which cause middle class to shrink. And all of what was mention led to this: 83 percent of all U.S. stocks are in the hands of 1 percent of the people; 61 percent of Americans "always or usually" live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007;  66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans; a staggering 43 percent of Americans have less than $10,000 saved up for retirement; only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975; for the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together; the bottom 50 percent of income earners in the United States now collectively own less than 1 percent of the nation's wealth; in the United States, the average federal worker now earns 60% MORE than the average worker in the private sector;  the top 1 percent of U.S. households own nearly twice as much of America's corporate wealth as they did just 15 years ago; more than 40 percent of Americans who actually are employed are now working in service jobs, which are often very low paying; for the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.This is what American workers now must compete against: in China a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour.(Syder 1) Government and corporate actions took a wild turn and now working towards the destruction of the middle class, which is fundamental part of any democratic society. The following situation creates a great sense of a true and most powerful democracy being under a great threat. Balance between rich and poor is shifting greatly and potentially creating a situation from which American ancestors ran away from centuries ago.

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As corporations pose enormous numbers of disadvantages a common people thought-out the world are affected, with many of them being unaware of the truth. Since most of the corporations are profit driven they do whatever it takes to increase profits and cut down the costs. Health, safety, environmental and 'humane' concerns seem not bother corporate sharks. For instance a yogurt manufacturer who puts real strawberries in yogurts faces a proposition of putting artificial supplements of color and taste, which will make the yogurt last longer and reduce the costs. This decision will not have a positive impact on consumers health, however, since an average consumer does not possess an in-depth knowledge of chemical ingredients he or she will likely to by that yogurt for the reason of its 'good taste' and previous reputation. GMO foods is another major concern corporations introduced to people. Genetically modified organisms are untested, hardly controlled, but include a majority of the food supply in United States. Nothing proves that these products are safe and since companies are not required to label those types of products, it is impossible for consumer to determine its health effects. Due to this activities number farmers throughout the states has been declining dramatically in the past decades, not because of their own desire.

Remember the 'old' Tucker? An automobile designed by Preston Tucker, a outstanding entrepreneur from Michigan. In late 1940-s this man engineered a car that surpassed any car 'his' day. The car in itself was not perfect mechanically, but that could have been fix with appropriate amount of founds, what is really essential here is Tuckers innovations. Here are some of cars features: the frame of the car was stronger to increase safety, disc brakes, fuel injection, independent suspension and seat belts! Tucker was by far the safest car of the day, and the same safety was standardized by car manufacturers only decades later. If only a seatbelt on its own doubles chances of survival during a crash, one can only imagine how many lives could have been saved, were seatbelts adopted by industry at that time. To materialize his dream Tucker needed financing. SEC was the federal government agency to offer him just that. This deal backfired, and was one of the causes of Tuckers decline. Tuckers dream was diminished by politicians working along with corrupt newspaper journalists, along with Ford, Chrysler and General Motors. American history consists of variety of examples of congressmen and federal regulatory agencies protecting established companies from new competition. True free market in itself resembles a healthy competition, that consists of lower pricing, better services, or new ideas. If Tucker would not have been stopped, many of us would of being driving different cars today. 'Strategic' interest, which can be interpreted many ways are used by governmental agencies in order to control the market (Rehmke 1). Too often 'strategic' interest of governmental matter are not concerned with progress, safety or freedom. Where did the railroad lines disappear? Efficient, safe and reliable way to transport passengers and goods none of those factors mattered once corporations discovered the potential to make a nation dependant, make billions and gain even greater control. Train got 'old-fashioned' in the United States, while most of the world uses railroads as a main form of transportation of goods. Developed countries like France, Japan, England, Germany, Argentina and Australia all use rail transportation. Railroad industry reached its peak in the early twentieth century in the United States, today its half the size. Thought being an important part of transportation, railroad system potential in the United States is yet to be fulfilled.

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