Thursday, June 30, 2011

The New American Poverty Part III

On the first day of June, I spent most of my day at the International Council of Shopping Centers Hispanic Markets Conference here in El Paso.  ICSC was holding the conference to teach its members how to reach Hispanic Markets, and they chose El Paso for the site of the event.  One of the speakers at the event was Jose Legaspi who owns a large group of shopping centers in California which cater primarily to Hispanics.  He explained that as part of the marketing strategy, his shopping centers contain areas for small kiosks to incubate tiny start up businesses.  "For Hispanics," Legaspi told us, "the American dream is actually self employment. We want to own our business."

Actually, I think that for many Americans of all ethnicities and cultural backgrounds, self employment and entrepreneurship are a critical component of the American dream.  Owning our own businesses gives us a chance to set the course of our futures in a way that we can never do as employees of a large or even mid-sized corporation.  Even if the corporation is a good one and we could earn a good living, nothing quite compares with the freedom and adventure of owning a business.

But as with homeownership, we are seeing policies from federal, state and local governments dismantle opportunities for business ownership.  We are being transformed from a nation of business owners to a nation of employees through excessive regulations.

If I were to give even a basic list of all of the attacks on small businesses in the U.S. today, I would be writing non-stop until next 4th of July. Every day we see some egregious new assault on business owners, whether through the FDA, the EPA, Health and Human Services, or any of a number of other agencies which are micromanaging small business out of business.  From family farms, to small coal mining operations, to doctors, to restaurants, to small independent professionals selling financial services--practically every industry appears to have some government agency with that particular profession in its sites.  We have Obamacare  poised to tax small businesses into oblivion, although large corporations have been able to get waivers for their employees.  Dodd-Frank has put such onerous burdens on small independent loan originators that they have almost become extinct.  Five years ago, mortgage brokers originated approximately 65% of mortgage loans nationwide, and a study by JD Power and Associates showed that consumers who went to a mortgage broker reported a more positive experience than those who went directly to a lender. Today national licensure requirements, expensive continuing education, and excessive disclosure requirements and caps on income have thinned the ranks of mortgage brokers so dramatically that we originate just under 7% of the mortgage loans in 2011.

But we are by no means the only financial service professionals being affected by the new regulations.  A friend of mine set up her own insurance agency last year after many years of working for someone else. She has been a life and health insurance agent for many years, but she was explaining to me that she is about to be forced out of her profession by Obamacare.  As the states set up their health insurance exchanges, health insurance agents will no longer need to exist.  "But I am close to retirement," she told me, "So I will probably just retire and let somebody else figure this out."  If Obamacare did not exist, my friend would probably keep working.  She might even delay taking her Social Security for a few years since she had always earned a good income and could afford to wait a few years.  Instead, because of the new laws, she will stop contributing to the tax base and start drawing benefits from an already bankrupt system.

It is a tragedy that at a time when unemployment remains extremely high and millions of Americans cannot find work, our combined federal, state and local governments appear to be expending all of their efforts attacking and destroying small business. Small business historically has created 90% of jobs, and yet when regulations in every industry work to dismantle small companies or to make the cost of starting up prohibitively expensive, how do we expect to help unemployed Americans find work?  Instead of trying to shrink the numbers of unemployed people, we are actually adding to their ranks by forcing more and more businesses out of business.  Older workers are likely to say, as my friend has, "Oh well, I am close to retirement anyway."  Younger workers will find themselves competing for a shrinking pool of job openings, and as the number of unemployed continues to rise in proportion to the number of available jobs, wages and benefits will naturally drop.

At the end of this mess, we are going to find ourselves in the same situation that most of the people I know are in today--working many longer hours for less money with less hope for the future.  Years of work and sacrifice and dedication is being rewarded with bankruptcy and business closure.  And we are teaching the younger generations that hard work, sacrifice and dedication are basically meaningless, because in the end they don't produce anything.  So they are less likely to work and sacrifice themselves, having seen that our work and sacrifice produced nothing but loss and heartache. 

The American Dream rewards initiative, creativity, ability and ingenuity with success.  That success is partly in the form of material rewards.  But it also includes self-respect, respect in the community, and a sense of accomplishment.  Achieving the American Dream means building something that we can actually pass down to our children. This is a legacy that past generations have handed down to us as Americans.  The New American Poverty says that achievement, initiative and hard work are not worth recognizing.  Accomplishment should not be rewarded over failure; diligence should not be prized more than sloth. One action is as good as another because no matter how hard we work or how much we refuse to work, we all end up in the same place. The message of the New American Poverty is that success is bad, and the effort expended trying to become successful is just a waste of time.

I don't know about all of you reading, but I don't want to hand poverty down to the next generation as their legacy.  I want my nieces and nephews to know that their actions matter and that they can have as much opportunity as they are willing to work for.  But as a society, we will never be able to hand that message down to the next generation unless we are willing to trade the New American Poverty for the genuine American Dream.

For books and blog posts by Alexandra Swann visit her website at

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