From the start, Willard (did you know?) Mitt Romney’s candidacy has been about business. But to my surprise — the business theme busting the seams of Day 1 of the Republican convention in Tampa was not what I expected:
The heroism of small business.
On national public broadcast television — the only network with continuous convention coverage — the script has unfolded consistently and relentlessly. Speaker after speaker, whether a state politician or a budding entrepreneur, has struck the same chords. Small business is the backbone of the economy. Small business creates jobs. Small business is being strangled by Obamaian regulations. Entrepreneurs are what made this country great.
The convention motto — chanted from the floor and plastered on placards — is “We Built It.” The “we,” presumably, are small proprietors, the “it” the nation. It’s an interesting twist on the kind of slogan that historically served the labor movement.
And it’s a shrewd strategy. First, next to farmers, small entrepreneurs are probably the most romanticized business group in America. Long ago, family farms became agribusiness, with vast assets and generous federal price supports and crop insurance programs. They don’t wield pitchforks, they drive million-dollar combines. But still we love them … or the idea of them, as mythologized in movies and television.
We love small business because from acorns sometimes oak trees grow. Land of opportunity. The chance to “achieve the dream” (Mr. Rick Santorum just said that.) We admire them — not the managers of national chain restaurants, but the moms and pops in the local joints — toiling behind the counter. And if and when it works, mom and pop open a second place, a third, a chain, make it Big.
The evidence (familiar to those of us who teach in business school entrepreneurship programs) tells a different story. The overwhelming reason Americans launch their own firms is to “be my own boss.” No great surprise there, especially to those who have worked for a typical large corporation. But what about the Making It Big part of the success narrative, the We Built It narrative?
It is true that, taken together, small business employs hundreds of millions of Americans. However, the vast majority of start-ups neither aspire to nor actually ever do employ more than two people. Their owners are less well educated than the average big-firm employee. They make less money on average than if they worked for someone else. And their firms fail at a staggering rate. Depending on the study, the average life of a U.S. start-up is one, two, maybe four years tops. Almost all of them are severely undercapitalized. Most don’t know how to put together a basic profit and loss statement. The percentage that go on to employ a dozen or more people is miniscule; the number of those that reach the IPO stage can be counted on your fingers and toes and mine in a given years, in the whole country.
In short, small businesspeople are heroically overoptimistic. Good thing for the economy, bad thing for most of them. Seems like almost every American today wants to be an entrepreneur. If “the economy” or “big business” won’t create a job for me, I’ll create my own.
So the Republicans have latched on to a very appealing myth — and not coincidentally at a time when President Obama has been trying to revive American manufacturing (a.k.a. big business). But the relationship between that myth and Mr. Romney is peculiar. Firms like Bain Capital have no time for mom and pop; they seek to consolidate, restructure, rationalize, leverage, and otherwise wring greater profit from medium, large, and super-sized corporations.
Big business has not been mentioned on this first eve in Tampa. Surely, high finance has not and will not be talked about. What Bain’s Mitt Romney and others like him have done for their riches (when successful) remains a deep mystery for most Americans — mom and pop included. The message of his business career seems more basic: Americans love success.
Ted Cruz, U.S. Senate candidate from Texas, (right) has just played the tune again. “The Obama Administration has waged a war against small business.” True, national health care has increased costs for firms larger than that majority of startups with one or two employees. But beyond that, little has changed.
I thought that at this Republican party the key economic issues would be the ones we’ve been hearing about from red staters for years: high unemployment, slow growth, high taxes, budget deficits and towering debt, and maybe environmental regulation (a la oil drilling). The good ole reliables.
Instead, it’s about the Obama Administration crushing the noble entrepreneur. Mitt Romney — whose business career lurked in the shadowy world of big business and high finance — was scarcely mentioned until Ann Romney took the podium at the end of the evening.