An employee counts money from a sale at Chagrin Hardware in Chagrin Falls, Ohio. (AP Photo/Amy Sancetta)
A promising new force is finding its voice in progressive politics, though it is still widely ignored or misunderstood. These overlooked progressives are small-business owners and entrepreneurs who are not usually confused with left-wing activists. It does seem improbable: roughly half of small-business people are Republicans, only a third or so identify themselves as Democrats, and some certainly fit the old stereotype. The GOP idolizes business folks as free-market, small-government conservatives. On the left, they are frequently dismissed as small-minded right-wingers.
But if you listen to them more closely, you will hear jarring expressions of distinctly liberal opinions. And they express salty disgust for the US Chamber of Commerce and the National Federation of Independent Business, which claim to speak for the little guys on Main Street. Actually, these little guys accuse the US Chamber and the NFIB of identity theft.
The American Sustainable Business Council, along with several other like-minded groups, is determined to counter this corporate-financed propaganda by enabling small-business owners to speak for themselves. Simple as that may sound, it has great potential to alter political alignments and clear the way for a future economy based on very different principles and values. The old stereotype has lost its relevance.
The ASBC was created four years ago by progressive activists and thinkers on both coasts, supported by a couple of progressive foundations that saw missed opportunities for political development. The idea was to hook up scores, even hundreds, of local groups already forming and build a broad network of kindred spirits. The council would cooperate with two allied groups, the Main Street Alliance and the Small Business Majority, to create a provocative new presence in national politics: citizens campaigning for a new economy who are poorly represented by both parties.
Indeed, the ASBC quickly discovered that the Small Business Administration, a federal agency created to speak for the little guys, had been captured by the corporate big boys and used to spin convenient myths about what small-business people think of government.
The forward-looking agitators surrounding the ASBC are quite diverse, but they are the natural allies of those fighting to address climate change and for other progressive issues. You can glimpse the possibilities in a sampler of the opinions that the council has collected to educate the media and politicians.
Camille Moran, president and CEO of Caramor Industries and Four Seasons Christmas Tree Farm in Natchitoches, Louisiana: “Wall Street wheelers and dealers would get no sympathy saying that ending the high-income Bush tax cuts would hurt them, so instead they pretend it would hurt Main Street small business and employment. Don’t fall for it…. That’s a trillion dollars less we would have for education, roads, security, small business assistance and all of the other things that actually help our communities.”
Joseph Rotella, president of Spencer Organ Company in Waltham, Massachusetts: “As a small business owner and as an American, I support proposals to raise the federal minimum wage to at least $9.80 by 2014…. Not only is increasing the minimum wage the right and fair thing to do, but it will also help stimulate our struggling economy by putting more money into the hands of workers who need to spend it.”
ReShonda Young, operations manager of Alpha Express, a family-owned delivery service in Waterloo, Iowa: “We’re not afraid to compete with the biggest delivery companies out here, but it needs to be a fair fight, not one in which big corporations use loopholes to avoid their taxes, stick our business with the tab.”
Susan Inglis, executive director of the Sustainable Furnishings Council in Chapel Hill, North Carolina: “Our way of protecting consumers from toxic chemicals is broken. The chemical industry shouldn’t be able to market chemicals to manufacturers and retailers unless we know beyond a reasonable doubt that they are safe. They made the chemicals, they should be held responsible.”
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These opinions are confirmed by polling. On many left-right disputes, more small-business owners are standing with progressives. A poll by Lake Research for the ASBC, the Main Street Alliance and Small Business Majority, for instance, found that 90 percent of a random sample of small-business owners believe “big corporations use loopholes to avoid taxes that small businesses have to pay,” and three-fourths said their own businesses suffer because of it. An Oregon survey by the Main Street Alliance found that 79 percent of the respondents regard the Supreme Court’s Citizens United decision as bad for small business. The same survey found that a constitutional amendment to establish that “corporations are not people and money is not speech” is favored by 72 percent.
A Field Research survey in California and Oregon for Kaiser Permanente and Small Business Majority shows that a majority of small businesses ended up supporting Obama’s healthcare reform once they understood why it was good for them. And other surveys show that small businesses overwhelmingly endorse stronger regulation of Wall Street—no wonder, since they suffered severely when bankers stopped lending—and welcome the new Consumer Financial Protection Bureau. And they strongly support (75 percent in favor) stricter regulations to protect people from cancer-causing chemicals in everyday products.
A strong majority of small-business owners say they want more government spending for infrastructure projects, clean-energy investments and mortgage debt write-downs to revive housing. Contrary to GOP dogma, they see the essential economic problem as insufficient consumer demand, not excessive regulation or deficit spending. They support higher taxes on the wealthy. They want a repeal of the carried-interest tax break for hedge fund managers. They want an end to offshore tax loopholes for major investors and multinational corporations.
“The traditional strategy [for liberal campaigns] has been to look at the larger corporate players and then beat up on them because they are so powerful,” says David Levine, the ASBC’s co-founder and CEO. “We want to add a business voice that, historically, has been missing. What we are trying to say to others is that, in order to build a more just and stable economy and society, we have to work with a set of businesses and business organizations, large and small, that actually have these values in mind. And they actually know what’s going to work for business.”
“Most small-business people are really not very political,” explains John Arensmeyer, founder and CEO of Small Business Majority. “They see themselves as dealing with practical problems. But when you get closer to them, you find these guys are actively engaged with the same values as progressives, even if they don’t put it that way.” He adds that his group’s polling shows strong support for community banks and credit unions and is “off the charts” on mega-banks. “These people really hate the big banks,” he says.
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This clash in political values defines a David-and-Goliath contest. True, the ASBC is rapidly expanding its network of networks and partnering with state and local organizations. But it is inconceivable that the council could ever match the massive money and lobbying power of major corporations, the “too big to fail” banks, the US Chamber of Commerce or the NFIB. But small business has an asset those organizations will never have: credibility on Main Street.
The ASBC claims to represent some 160,000 businesses, but that’s counting the memberships of its sixty or so strategic partners. In other words, it lacks the mass of the better-known organizations as well as their big money. ASBC co-founder David Brodwin explains why the standard tactics are unlikely to work. “The 100,000-signatures approach that many large grassroots groups use is not really optimal for someone who’s running a business,” he says.
But don’t count little David out just yet. The ASBC’s great potential is reflected in the fact that small-business types around the country are creating political organizations and dissenting from the dysfunctional status quo. They are promoting a less destructive and wasteful economic system, as well as a society more equitable and respectful of the natural world. These people are inspired by indignation, but also by optimism—they have confidence in themselves and in American inventiveness.
The proliferating groups allied with the ASBC are strongly influenced by green politics. The council has partnered, for instance, with nonprofits supporting new values and new businesses, including Local First Arizona, Local First Chicago, the Manhattan Chamber of Commerce, Practice Greenhealth, the National Latino Farmers & Ranchers Trade Association, Social Venture Network, the South Carolina Small Business Chamber of Commerce and Cleveland’s Evergreen Cooperatives. Small Business Majority likewise has an overlapping network that includes the Colorado Women’s Chamber of Commerce, the New Mexico Green Chamber of Commerce, the Virginia Asian Chamber of Commerce, the US Hispanic Chamber of Commerce, the American Booksellers Association and more. This crowd of outsiders and independent players, as their names suggest, reflects the changing demographics of voters.
David can prevail despite Goliath’s advantages, because the insurgents are addressing the country’s real disorders—facing facts that the conservative establishment denies and proposing solutions that cowardly politicians in both parties still evade.
“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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Ally LaTourelle went to law school expecting to become an environmental lawyer, but instead wound up on the frontiers of industrial reinvention. She is vice president of BioAmber, a company creating biodegradable alternatives to replace the toxic petrochemicals that now permeate industry. “From learning about the law, I was convinced that sustainable business is the engine for systemic change,” LaTourelle explains. “Sustainable business rights the sinking ship, because it creates underlying value and economic integrity. It is more in line with the reality we are facing of limited resources and a global population surge.”
Among its pioneering products, BioAmber has a platform chemical—derived from sugar beets, corn or agricultural waste—that can replace petrochemicals in personal-care products like lotions and is “100 percent natural, biodegradable, eco-certified and sustainable,” the company says. Another BioAmber innovation will be used for biodegradable automotive plastics. These new chemicals are not only renewable and nontoxic; they will dramatically reduce the oil needed in auto manufacturing and the gasoline required by lighter cars. This industrial revolution is only beginning, and it has enormous promise for creating a sustainable economy. But the United States lags behind other nations, in large part because the chemical industry has used its squads of lobbyists and lawyers in Washington to block the way. This is a concrete case of how the old order uses its political muscle to keep a new and better way from replacing it.
Last summer, another bioplastics company, Purac, announced a new biodegradable product that can replace styrene, the ubiquitous plastic used in appliances, luggage, telephone casings, sporting helmets, auto parts and electronics. Styrene is everywhere in our consumer society. It is also a cancer-causing agent, as experts have known for decades, but the EPA has failed to classify it as such. The chemical companies, joined by other industrial sectors, have repeatedly blocked federal action with relentless lobbying, spurious scientific objections, lawsuits and back-room fixes in Congress. The best that government has achieved so far has been to say that styrene is “reasonably anticipated to be a human carcinogen.”
LaTourelle and the ASBC are wildly outnumbered, but they have plunged into the thickets of Washington politics to speak for the innovators. She testified at a congressional hearing last year because word was being spread among House members that regulating styrene and other toxic chemicals would be a job killer. “We wanted government to know there is an industry out there of nontoxic substitutes that can get to scale very quickly and provide the marketplace with alternatives,” LaTourelle says.
The thirty-year failure to designate chemicals like styrene, formaldehyde and chromium in drinking water as carcinogens is one of the great scandals of modern governance. It hasn’t stirred the indignation it warrants because it’s difficult for the press and public to follow regulatory actions. Meaningful events are spread over years, not weeks or months, and the crucial discussions often occur behind closed doors at law firms. Meanwhile, some 70 million Americans are still drinking water laced with chromium—the scandal Erin Brockovich exposed twenty years ago.
The ASBC learned that ingenious lobbying by the chemical crowd has seduced the Small Business Administration into fronting for big business’s demands to kill new regulations. An investigation by the Center for Effective Government, a watchdog group, uncovered e-mail traffic from industry lobbyists coaching SBA officials on what to say. When the SBA meets with trade associations, the conclaves are typically dominated by big-business lawyers and lobbyists from outfits like the US Chamber of Commerce and the NFIB—no press or public allowed. David Levine of the ASBC wangled an invitation to let one of his council’s representatives attend a private meeting. The ASBC rep felt lonely and out of place.
Despite these odds, Ally LaTourelle isn’t feeling defeated. She confidently predicts the big boys are going to lose their fight against sustainability because bioproducts of many kinds, developed and produced in many other countries, are already coming onto the global market. “These changes are really inevitable, because the alternatives are already here,” she says. “Stalling the inevitable is the most the industry can do. Stalling through litigation is what good lawyers do—I’m an attorney, so I can say that. It’s a classic technique for draining resources [from a competitor] or drawing attention away from new business opportunities.”
BioAmber itself is truly global—based in France, Canada, China and the United States—and it competes with dozens of fledgling producers around the world. “Our compliance department has a global perspective,” LaTourelle says. “Our clients and customers can check the database and see for themselves that this chemical is banned in California or that chemical is banned in Germany, and another is not allowed in Canada but is allowed in the United States. The US chemical companies have created a dark shadow over their industry. They are not doing anybody any good—including themselves.”
By using their outsize political influence to protect their own profits, the established industrial powers are blocking progress. That might be admired in business schools still preaching that the bottom line comes before everything else, but it does long-term injury to America’s future.
Small-business people can change things. With their various shades of green, they can awaken the populace and help build a future-looking consensus. Ally LaTourelle thinks it’s possible. “To me, sustainable business is not only about injecting the concept of the public commons back into the marketplace, which is critical to our economic survival and social fabric,” she says. “It’s also just plain common sense.”