Meet the New Left: Small-Business Owners
“Many of the current policies that seem to be pro-business really aren’t,” Brodwin says. “We prop up old industries that have strong political connections but are no longer the leading edge of creating a vibrant economy. Big agriculture and fossil fuels are the main examples. Farm subsidies go back to the 1930s, when there actually were family farms. Our energy policy goes back to the 1920s. We have never revisited those decisions, and that’s just terrible for the economy. Many businesses, particularly small businesses, understand that is not good for America and not good for them, but they are drowned out by the orchestrated campaign that’s funded by mostly large companies and mostly old-line companies.”
Politicians might find cover for doing the right thing by building alliances with these progressive business owners. Americans admire small business, at least in the abstract. The guys from Main Street have greater credibility than the corporate big boys who dominate government. When conservatives describe sustainable reforms as “job killers,” small-business people can explain why this argument is nonsense.
Many progressives don’t really know much about small-business types or grasp that they are potential allies. Josh Knauer, president and CEO of Rhiza, a software company in Pittsburgh, assures me playfully, “We are not a hippie colony.” His firm was cited last year as one of the fastest-growing tech companies in the area, yet it is dedicated to what environmentalists call the “triple bottom line”: serving people, profit and the planet. That’s a radical departure from what they teach at business schools.
The three objectives are mutually reinforcing, Knauer explains. “In our workplace, we have a tremendous number of things we do for employees that make this a more comfortable place,” including allowing parents to bring their babies to the office. “That is the crunchy-granola side of our company, which is, you know, happy employees and all that.” The bottom-line side is that employees who feel they are part of the company are more productive. “You may be helping the environment or the community around you,” Knauer says. “But from a business perspective, it makes so much sense. Our company is much more profitable because we are a responsible business.”
That conviction turns contemporary business practices upside down. By refusing to squeeze their workforce or the environment or local community values to enhance profits, Knauer argues, these companies, through their equitable and responsible management, are engaged in self-interested profit-seeking. And the data bear this out: numerous academic studies and stock-market analyses have found that corporations with better records on social behavior do better on returns and stock prices.
Yet the orthodox ideology—maximizing returns by ignoring the destructive collateral consequences—still prevails in boardrooms, the academy and government at the local, state and federal levels. Both political parties bow to this narrow-minded logic, harshly enforced by financial markets. Government thus hesitates to enact corrective policies that would protect the well-being of society. Corporate lobbyists demand—and get—dubious subsidies with promises of faster growth and more jobs.
Knauer sees sustainability as the way out of this trap. “I deeply believe in building resilient communities,” he says. “This is what happens in ecosystems. A healthy ecosystem is resilient: it can withstand fire, it can withstand drought. Basically, it can withstand anything you can throw at it. When businesses are responsible to our communities, you build more resilient, thriving communities.” His prime example of unsustainable practices is the distorted tax system and offshore loopholes that let multinationals off the hook. “In Pennsylvania, we’re talking about $2.1 billion of tax revenue lost every year,” he says. “The burden of paying for that lost revenue falls on the schools, and in Pennsylvania they are turning off the spigot for science, engineering and math education, which is hurting our future.” Why doesn’t government make other choices? “Because these same corporations are spending millions to lobby Congress and state governments to keep the loopholes open,” Knauer responds. “It won’t get fixed until the vast majority of Americans who don’t benefit step up and demand it.”
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When he decided to launch the South Carolina Small Business Chamber of Commerce in a very conservative red state, Frank Knapp had no intention of serving the “tree huggers,” as he calls them. The clients of his advertising and PR firm were complaining about unfair state taxes, so Knapp helped organize them for political action, winning a reduction in the small-business tax rate from 7 to 5 percent. “Elected leaders will talk about how they love small business, but their actions are really aimed at big business, and the legislation is really addressed to big-business problems,” Knapp says. It took five years of agitation to get the tax rate reduced. Along the way, his group raised hell about other issues that big business wouldn’t address, such as healthcare costs and exorbitant insurance rates. His “little guy” chamber eventually grew to more than 5,000 members.
“We are the renegades in the business community,” Knapp says. “We went to court; we partnered with consumer groups. Some very big companies are self-insured. Some very large insurance companies are members of the state Chamber of Commerce—so the state Chamber is conflicted. We supported an expansion of Medicaid so small business could receive premium assistance. We even proposed a cigarette tax to pay for it.”
And the small-business chamber wound up arm in arm with the tree huggers. “We really weren’t focused on sustainability,” Knapp recalls. “But we have been big supporters of conservation, of renewable and sustainable energy.” His was the first business group in South Carolina to address climate change. It infuriated the coal industry by endorsing cap-and-trade legislation. “I’ll tell you why,” Knapp says. “In South Carolina, tourism is the biggest industry—not tobacco, not textiles. And tourism is small business. We knew way back in the mid-2000s that climate change was going to have an extreme effect on South Carolina. We’re going to lose the first row of hotels at Myrtle Beach. A third of Charleston will be underwater. How are we going to protect those small-business owners?”
Listening to small businesses turned out to be a forward-looking approach—and small-business people can be more persuasive in some circles. “The environmentalists did a lot, but they didn’t put it in a business frame—that’s what politicians respond to,” Knapp says. “They don’t want to be associated with the tree huggers. But if there’s a business frame that shows how the tree huggers will create more jobs and have a positive impact on the economy, then the politicians will be for it.”
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