A small-business renaissance to make America great again

Donald Trump’s unexpected win in November was a win for those who have bore the brunt of the recent Great Recession and the changing economy. For the first time in years, their voices were heard and harnessed into a national, electoral victory. Yet even though Trump may have won the battle, he may lose the real war.

Across the country, numerous towns have decayed; too many businesses have closed or left our shores; and many people have lost their identity, self-worth and dignity. The real war, and the central political, economic and moral question of our time, is: How do we rebuild the foundation of our country?

{mosads}To date, we, as a society, have essentially offered three options to those in economically distressed areas: (1) move to where the good-paying jobs are; (2) re-educate yourself; or (3) social welfare. Telling people that they should move fails to recognize their connection to where they grew up, their family and their community. Telling people that they should re-educate themselves is fundamentally elitist, may be impractical, and fails to acknowledge the skills that people in these areas already have. 

Because these options do not match the actual needs and plight of Americans in economically distressed areas, the unintended consequence has been the growth of the social welfare rolls — largely out of desperation — not because these Americans want it this way. The leadership of our country has failed them.

According to a 2013 Congressional Budget Office report, between 1972-2012, means-tested social welfare programs have increased approximately four-fold. During this same time period, wages stagnated and the phenomenon of globalization began to unfold.

The same report went on to say: “Total federal spending on 10 [social welfare] programs (adjusted to exclude the effects of inflation) rose more than ten-fold — or by an average of about 6 percent a year — in the four decades since 1972.” This CBO report also identified three important factors that contributed to the increase in social welfare program participation: (1) increase in the U.S. population, (2) the Great Recession in 2007-2009 and the associated weak recovery, and (3) steps taken by lawmakers to create new programs and expand eligibility of existing programs.

Not only is the growth of social welfare programs economically unsustainable, it does not address the core of the economic challenges that the United States faces in the 21st century. We needed new solutions.

During the 2016 presidential election, Donald Trump offered a fourth way.

He advocated for protectionism and some form of presidential activism within the U.S. economy. While this approach may maintain some jobs in the United States, it is an extremely personality-centric approach and is likely to only have marginal impact on the lives of the Americans it is intended to help.

Furthermore, Trump’s fourth way does not address the root causes of the changing U.S. economy head-on. As long as labor is cheaper overseas, jobs will continue to go there. As long as technology and innovation exists, jobs will continue to be replaced.

In the short run, the president’s approach may help some people, but it does not address the fundamental nature of challenges we face — and does not help the country in the long run. You cannot bully your way to a stronger competitive position; you have to build it. There needs to be a fifth way.

The central purpose of a “fifth way” is to build a new political, economic and social foundation for our country through a small-business renaissance. 

In economically distressed areas, where towns have decayed, businesses have left and social ills have grown, federal and state governments should increase taxpayer-funded capital infusion to support new and existing, competitive small businesses. This is not unlike what the United States already does overseas through the U.S. Agency for International Development (USAID), and may be a better use of taxpayer dollars for those in economically distressed areas than social welfare alone.

Capital infusion can also come from the private sector, similar to Goldman Sach’s 10,000 small-businesses initiative. In concert, the federal government should lift the burden of corporate taxes and decrease the regulatory burden on small business to give them time to incubate and grow, similar to New York state’s START-UP NY initiative. By energizing and incubating local, micro-economies, towns would become reinvigorated, schools would benefit, the broader community would feel renewed and dignity would be restored.

This is not theory for me. I grew up in a three-generation small business. I intimately understand and have personally witnessed the challenges for small businesses in the current environment, as well as the opportunities for towns, local economies and families through small business.

Imagine this: In areas where manufacturing jobs have left, individuals who were once the foremen on the manufacturing floor are now the small-business owners. And people who worked under the foremen are now the small business’s employees. The foremen have the leadership and the initiative, and the line workers have the skills. What they need is capital, lower barriers to entry, easy access to U.S. and global markets and the time to incubate and compete.

The fifth way is much more than an approach to building small businesses in the United States. It is an approach for rebuilding the foundation of our economy, for repairing the social fraying of our society, and for renewing our country in the 21st century.

To paraphrase Abraham Lincoln: “A house divided, and with a crumbling foundation, cannot stand.” Our house is divided between those who have access to the global economy and those who do not. Moreover, our foundation is crumbling — economically and politically — and can no longer be ignored. It must be rebuilt.

President Trump’s solutions, at best, may begin patching parts of our economy, but they do not come close to winning the real war for our fellow Americans. The fifth way is necessary not only for our economy to compete and grow but also so that our Republic can thrive. Addressing this central, moral issue must be national purpose of our time.

Alex Gallo is senior associate at the Center for Strategic and International Studies and served as a professional staff member on the House Armed Services Committee for five years. He is a West Point graduate and combat veteran and a graduate of the Harvard Kennedy School. His work has been published by The Washington Post, National Review and Foreign Affairs.

The views of contributors are their own and are not the views of The Hill.