Companies of all Sizes fear National Health Care

Obama's massive health care proposal has far reaching implications, many of which we are now only beginning to learn about. One of the biggest areas of concern is the cost to businesses of every size. Higher government costs on business leads to several negative effects, including these businesses becoming less competitive (or leaving the US to avoid the costs), laying off employees to avoid certain regulatory thresholds or simply to remain competitive, and higher prices for consumers (since businesses will be forced to pass on the higher costs of doing business).

The Associated Press is reporting that "In the first two days after the law was signed, three major companies — Deere & Co., Caterpillar Inc. and Valero Energy — said they expect to take a total hit of $265 million to account for smaller tax deductions in the future. With more than 3,500 companies now getting the tax break as an incentive to keep providing coverage, others are almost certain to announce similar cost increases in the weeks ahead as they sort out the impact of the change. Figuring out what it will mean for retirees will take longer, but analysts said as many as 2 million could lose the prescription drug coverage provided by their former employers, leaving them to enroll in Medicare's program."

One of the first and most important rules I learned in economics was this little concept called the "secondary effects." Public policy is virtually always full of good intentions, but they are often damaged by the unintended consequences. The government thought they were going to be able to get businesses to pick up the load of its socialized health care programs. Unfortunately, many of these businesses will not be able to (nor have to), because they will be exempt due to their losses. These results are similar to the Massachusetts experience with government health care, where there was suppose to be huge health insurance relief by business, that instead resulted in a large increase in government coverage and the costs that come with such.

The problem does not end with big businesses though. According to the Pittsburgh Business Journal, "Employers with 50+ workers that do not offer health insurance will pay $2,000 per full-time worker (not including the first 30 workers) if any of their employees purchases government-subsidized coverage through an exchange. Employers with 50+ workers that offer unaffordable coverage or coverage that does not cover at least 60 percent of allowable costs will pay $3,000 for any employee who receives a tax credit in the exchange" Again, myopic policy makers who do not understand basic human nature, do not see the obvious consequence of these type of policies. These still small, but aspiring to be larger, businesses will simply layoff enough employees to make sure they fall beneath the 50+ threshold. They will likely make up the loss through outsourcing and vendors, including the utilization of companies overseas. This latter result is something people of most political stripes hate to see happen, but will be the natural result of Obamacare.

Currently the US is in the middle of what is being called the "Great Recession," with the highest unemployment numbers in over a quarter of a century. The Obama administration's irresponsible health care policy could move the country closer to seeing the original Great Depression as the second worse economy in US history. Actually, the ones who should fear Obama's health care policies the most is not the employers, but the people who will ask these companies for a job.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

The Decline in US Economic Freedom

Since 1995 the Heritage Foundation and the Wall Street Journal have monitored the economic freedoms of countries around the world and have published their results in the 2010 Index of Economic Freedom. Ideas like "economic freedom" are a little subjective, but I like the stated view of the publication. According to the editors, economic freedom is defined as "the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state. In economically free societies, governments allow labor, capital and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself."

As far as methodology, the editors "measure ten components of economic freedom, assigning a grade in each using a scale from 0 to 100, where 100 represents the maximum freedom. The ten component scores are then averaged to give an overall economic freedom score for each country. The ten components of economic freedom are: business freedom, trade freedom, fiscal freedom, government spending, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption, and Labor Freedom."

We Americans like to believe that we live in the "land of the free and the home of the brave." Yet, most Americans note that our country is in decline. The top ten list of the 183 considered in the survey, gives you an idea of how bad it has become.

The US does not appear in the top five. Using school standards and 90 plus is an "A," no country on the list meets that criteria. With that, number 1 goes to Hong Kong at 89.7, declining 0.3 percent from 2009. The country reached this high status because of its "competitive tax regime, respect for property rights, and flexible labor market, coupled with an educated and highly motivated workforce, have stimulated an innovative, prosperous economy. Hong Kong is one of the world’s leading financial and business centers, and its legal and regulatory framework for the financial sector is transparent and efficient. Business regulation is straightforward. Despite the global economic slowdown, Hong Kong has maintained its status as Asia’s second-largest destination for foreign direct investment, attracting over $60 billion in 2008."

The other countries in the top four are Singapore (number 2 at 86.1 percent, down .1 percent), Australia (number 3 at 82.6 percent, with no change), New Zealand (number 4 at 82.1 percent, up.1 percent), and Ireland (number 5 at 81.3 percent, down .9 percent). New Zealand is only one of two countries in the top ten list to go up. According to the editors, "New Zealand continues to be a global leader in economic freedom, performing well on most of the components measured in the Index. The economy has an impressive record of market reforms and benefits from its openness to global trade and investment. The banking sector is characterized by sound regulations and prudent lending practices, and well-implemented structural reforms have allowed the New Zealand economy to weather the recent global financial and economic crisis relatively unscathed."

Countries six and seven round up the top tier of economic freedom (those with a "B"). The US fails to show up again. Switzerland (number 6 at 81.1 percent, up 1.7 percent) and Canada (number 7 at 80.4 percent, down 0.1 percent) occupy those spots. Switzerland is the other in the top ten to actually go up over the last year.

The United States (number 8 at 78.0 percent, down 2.7 percent) is one of three countries that rounds up the top ten with Denmark (number 9 at 77.9 percent, down 1.7 percent) and Chile (number 10 at 77.2 percent, down 1.1 percent). These countries did not even make it to the top tier, being below 80 percent and the United States had the dubious distinction of seeing the biggest decline in the past year (2.7 percent) among the top ten. In the arena of economic freedom, the US has a low score of "C+" at 78.0 percent.

The study notes that the "U.S. government’s interventionist responses to the financial and economic crisis that began in 2008 have significantly undermined economic freedom and long-term prospects for economic growth. Economic freedom has declined in seven of the 10 categories measured in the Index." It also states that "Uncertainties caused by ongoing regulatory changes and politically influenced stimulus spending have discouraged entrepreneurship and job creation, slowing recovery. Leadership in free trade has been undercut by 'Buy American' provisions in stimulus legislation and failure to pursue previously agreed free trade agreements with Panama, Colombia, and South Korea. Tax rates are increasingly uncompetitive, and massive stimulus spending is creating unprecedented deficits. Bailouts of financial and automotive firms have generated concerns about property rights."

Imagine, the US is a "second tier country" on the fast track of decline after only one year of one of the most anti-free market Administrations in US history. It will be interesting to see if the US is still in the top ten after the Obama presidency comes to an end.

Liberals, the Super Rich, and Strange Allies

If you read the fairy tale weaved by the major media and our history books, we would believe that liberal policies are beneficial to everyone, whether if those policies are popular are not. The upper classes can complain all they want, but they sleep better at night knowing that the government is generous with their wealth, even if those wealthy are actually "quite greedy." The middle class who aspire to be rich might have to face tougher regulations and taxes that might prevent them from meeting their dream, but at least they know their "fundamental needs" are being met. This would never happen, we are told, without the benevolent hand of the government. Than there are those who are poor and they are obviously the biggest beneficiaries of a big and generous government. These people would surely be found lying dead in the street without the generosity of a redistributing government.

The reality is, the only ones who benefit at all from a government that is growing out of control are the super rich and, if you consider getting "something for nothing" a "good thing," the poor. The rest of us are squeezed by the pressures driven by the highest income groups.

Liberals want us to believe that conservatives are "for business" while they are for "the people." It is correct that, true conservatives, support bills that encourage economic freedom. But businesses support liberal candidates as well. Liberals want us to believe that Obama raised almost ten times more than McCain in the last Presidential campaign by getting coupons and food stamps from the homeless and the destitute. According to the FEC, the top 1 parent income group gave three to one more to Barack Obama than John McCain. How is that possible for a President who is bent on being the "Peoples' President?" The reason for this is simple, the mega rich are the only ones that can actually afford big government.

I worked for a member of the US Senate and learned how the super rich and the liberals work hand and hand. For example, major energy companies and environmental activists (yes, odd bedfellows) decide that it was time to upgrade the environmental quality of gas pumps in the early 1990s. So, they send their team of lobbyists upon Washington, DC to persuade members of Congress to pass legislation that would cost -- $10,000 per gas pump on average in order to bring them up to code.

Now, the liberal members of Congress are sitting in their office and the lobbyists visit them. They see a "business man" who represents an energy company saying that forcing the upgrade of gas pumps is a good thing for everyone -- including business. It will "create new jobs" for those who make these better pumps. More "important," this legislation will make a "cleaner and safer environment," because fewer gas fumes will be pumped into the environment. The liberal, who is inclined towards expanding government any way, loves this. It is "pro-business" and "pro-environment, what can we lose?" What was lost was thousands of jobs, untold numbers of "mom and pop" gas stations that could not afford the upgrades, and consumers lost choices for buying gas. This epitomizes government at its worse. Big business has partnered with big government to mug small businesses for years with regulation and tax laws the latter cannot afford.

There is a similar situation when it comes to excessive, progressive, taxation. The super rich find this to be a laughable situation, since most of these taxes only apply when money is being used in economic activities. A great example is the capital gains tax. When you look at history, and when this tax was very high or in the process of increasing (like now), the result is a dramatic drop in economic activity and the jobs they created. The rich would sit on the largess they enjoyed and accumulated, while those who want to be rich find themselves unable to afford to take risks because the rewards were so damaged by the tax. The super rich actually get a break from the upper middle class that aspires to be rich when all taxes are high. In a way, these high taxes are an actual insurance program against those who would want to displace them on the economic ladder.

Big government, and its proponents, have always been funded and supported by the super rich. Although more than 80 percent of all jobs are created by small business, major corporations and the people that benefit from them, dictate government policies that keep the wealthy on top and increases the numbers of the poor (by destroying job creation among small businesses and providing increased incentives for choosing a life of poverty). So, the next time you meet someone who says they are liberal, ask them why don't they give the "little guy" a break and support freedom instead.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN 650). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

"Stimulus" will fail to create long term Job Growth

Both last year and in the early part of this year there was great enthusiasm by some (mainly in government) about the prospects of huge numbers of jobs that were going to be created by "stimulus" packages. Furthermore, voters were warned that, failure to provide such would lead to significant job loses and an unemployment rate as high as 8.5 percent. We were even told about police departments that would lose personnel short of serious government action.

Fox News reported of just such an example, but also provided the "rest of the story." "One hundred days ago President Obama signed his $787 billion stimulus package into law. On February 17 in Denver, Colorado he said the plan, 'includes aid to state and local governments to prevent layoffs of firefighters or police recruits — recruits like the ones in Columbus, Ohio, who were told that instead of being sworn in as officers, they would be let go.' On March 6, the president traveled to Columbus, Ohio to watch the recruits being sworn in as officers. He said jobs, 'all across Ohio will now be saved because of this recovery plan.' But it appears he spoke too soon. The Columbus Dispatch reports if voters turn down a proposed income tax hike in August, nearly 300 police officers would lose their jobs. The 25 new officers who shook the president's hand would be among the first to go. White House press secretary Robert Gibbs acknowledged the Columbus situation during today's briefing, admitting the recovery plan is temporary."

This strikes at the heart of the problem. Every job created by government "bailouts" and "stimulus packages" are all temporary without continuous funding. This is the beauty of market created jobs. Employment created by profit is typically long term employment and self-generated. Jobs that creates profits for the ones that created them, gives those employers an incentive to create more jobs. It is simple economics. The debate on stimulus should have focused on the real source of jobs. That would lead to the passage of competitive tax rates that would make the US the most attractive country in the world for job creation and not through excessive government programs that would lead to burdensome taxes on wealth (and thus job) creation.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Economic Agenda based on Realities

After a few weeks of euphoria in which it appeared that the economy was on an up turn we are receiving reports that unemployment has seen a remarkable increase. AFP reports that "US jobless claims in surprise jump for second week." The article goes on to point out that "The Labor Department said that initial jobless claims increased by 15,000 to 576,000 in the week to August 15, which happens to be the survey week for the monthly non-farm payrolls report, seen as one of the best indicators of economic momentum."

While the President and his Administration are making health care the single most important, millions of Americans are trying to figure out how to make the next payment on their home, their car, or their meal. Do they think health care is important? Maybe, but they think a job is imperative.

The largest unemployment rate in recent history. Forget about the 9.5 percent touted by the Obama Administration, economists on both the right and left say it is more, much more. Many

economists are projecting an unemployment as much as double of that when you factor in the untold numbers who have given up on the idea of finding a job.

It appears this Administration believes that the best way to solve our unemployment problem is by excessively taxing those who create jobs.. The majority of jobs comes from people who make $250,000 a year or more, yet this group is being singled out to pay more taxes. It has never been easier to move capital and with US tax rates the second highest among industrialized countries in the world, you can expect a flight of capital and jobs that comes with such.

Obama should distance himself from the fantasy that people are pounding the doors for socialized medicine when there are millions pounding the pavement for health care.

The Obama Administration should reduce barriers between people and jobs. This isn't through temporary government jobs that will run out with the subsidies, but through real jobs that create revenue for them to grow in number and in quality. The federal government should mandate the states to have a minimum wage law in each state of the union and allow them to set them based on the needs of the people and the cities. This would not cost the federal government a penny, but would spur economic activity immediately.

We should restore the competitiveness of US businesses and eliminate any temptation for jobs to be exported by relieving corporations of the burden of being a tax collector. Taxes are a fixed cost for doing business, plain and simple. If taxes are too high, businesses have no choice but move to places where the rate is less so they can lower prices and be competitive. This alone would have a profound impact on the creation of jobs. This policy would also encourage an increase in productivity and soften the blow of inflation.

The word "crisis" is often over used, but seems very appropriate in light of our current situation.

Obama is a modern version Nero, playing his fiddle of health care while the nation is in flames over unemployment.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Nancy Pelosi Visits Houston

Nancy Pelosi recently visited Houston, Texas and she received a rude awakening. Texas is not San Francisco. Glenn Beck loves to discuss the unique way Texans think about government, economy, politics, individual responsibilities, and liberty. Nancy Pelosi represents an area that fundamentally believes that people are victims, that government is the solution, that freedom is selective, and that some people deserve better treatment than others based on income, ethnic group, gender, and other factors. In many respects, Houston is the anti-San Francisco.

The reason for Nancy's visit? Pelosi was in town to promote her book, "Know Your Power: A Message to America's Daughters" at the Progressive Forum Houston ("progressive" is a euphemism for socialism). What she found was a large group (approximately 1,000) of Texans who are members of the Tea Party Society. This group was delighted to politely remind her that Houston's values are a little different than San Francisco's.

Pelosi's values includes:

• A record of increased government growth and higher taxes. She fundamentally believes government is the solution to many problems that are best solved by people.


• Consistently voting for energy policies that directly leads to higher prices at the gas pump and increases dependence on foreign countries.


• Calling illegal aliens "patriots" for violating immigration laws in this country.


• Voting against protecting America's election process by opposing efforts to require IDs at elections.


• Being an architect of the largest take over by the government in our history through regulations, taxes, and spending. It took over 180 years to reach a trillion dollar debt. Obama, Pelosi, and company are adding that amount annually through the current budget.

The crowd in Houston -- and seen in Tea Party movements around the country -- are looking for a different agenda and they come with a completely different sense of values.

The Tea Party movement is made up of hard working Americans. moms and dads, students, employers, employees, and entrepreneurs. Many are wondering who has been at the wheel and they are believing it is time to change those at the controls.

Pelosi loves to tell people about the problems she has inherited as Speaker of the House. The reality is, she has been in Congress since 1987. During that time she has served in numerous leadership positions and has consistently voted for more government, taxes, and regulations at every turn. It is safe to say, when given the opportunity to choose budgets, she always chose the biggest. Tax rates? The highest. Regulations? More. This is why so many people are up in arms today.

"The times, they are a changing." One of the people that needs to go, is Nancy Pelosi.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. Eric Bolling of Fox News and Fox Business says that Price’s Blog “is very influential and moves the blogosphere.” Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

What Works on the Small, Works on the Large

Recently my father-in-law visited from Minnesota and I really enjoy his company. We both love golf, classic rock, and my family, but when it comes to politics, we tend to have to keep our conversations short.

While we were both golfing we began discussing his future retirement, at that time he noted that he planned on moving to South Dakota. I knew he was from there originally, but I also knew he loved his adopted home. So I asked him why he was leaving and he said, "that's easy, South Dakota has a much better tax situation for retirees than virtually any state in the country." I cannot begin to state the many times he had told me how unpatriotic businesses were to leave the country because of tax and other laws.

With that I asked him, "so here you are, the average American, who is smart enough to change where you live to protect your wife and you from higher taxes, but you don't expect businesses to do the same thing with often large numbers of employees and even greater tax implications?" It is very rare to get him to get quiet once we gets started (and he would say the same about me), but he had that knowing look on his face that this conversation was over.

The United States has the second highest corporate tax rates of any industrialized country in the world and we are working hard to try to become number in this dubious area. Businesses are about efficiency, profit, and looking out for the interest of its stockholders. Taxes, like regulations and licensure laws, are just the fixed costs of doing business. If the costs get too high, businesses have no choice but to move to better places for commerce. It isn't personal, it is just business.

Most of the things that work or don't work on a micro level, translate the same on the macro. Because in both cases they include human nature and humans tend to respond to incentives (and disincentives) the same way. If the government could eliminate their fantasy and replace it with reality, all of our lives would be so much better.

Kevin Price is Host of the Price of Business, the longest running show on CNN 650 (M-F at 11 am), AOL Radio, and CBS Radio. Eric Bolling of Fox News and Fox Business says that Price’s Blog “is very influential and moves the blogosphere.” Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com.

Ten Pillars of Economic Wisdom: Now More than Ever

During the Great Depression the size of government grew exponentially and many believed that the United States had lost those essential principles that made this country the most prosperous on the face of the earth. It was during this time that an organization was formed, called the American Economic Foundation (AEF), and they put together the following “Ten Pillars”* to remind Americans what works in an economy. If people wondered if a policy was good and beneficial to everyone concerned, than it would stand the test of these Pillars.

In the 1990s, I was a Senior Fellow at AEF and I conducted seminars in the former Soviet Union about these principles and how they could be a guiding light to that region that suffered from decades of Communist totalitarianism. Today, we are about to slip into a command economy of our own where the government will seek to be in charge of all things. Today, with the Obama Administration, this country needs to be reminded of these principles now more than ever. You are going to see these principles frequently in my blog, in the Price of Business pages, and on the radio. These principles are a guiding light towards a free economy.

1. Nothing in our material world can come from nowhere or go nowhere, nor can it be free: everything in our economic life has a source, a destination, and a cost that must be paid.

Simply put, there is no such thing as a free lunch. Everything has a cost regardless of promises from politicians.

2. Government is never a source of goods. Everything produced is produced by the people, and everything that government gives to the people, it must first take from the people.

Recently, 25 percent of Americans who were asked in a survey how the government pays for its programs said it was because the US "has its own money." Those people need to be familiar with this Pillar. The bailouts we have seen cost plenty and will have a profound impact on our economy.

3. The only valuable money that government has to spend is that money taxed or borrowed out of the people’s earnings. When government decides to spend more than it has thus received, that extra unearned money is created out of thin air, through the banks, and, when spent, takes on value only by reducing the value of all money, savings, and insurance.

Much of the new spending we have seen by Obama (and Bush) is being financed by fiat money (essentially counterfeit) and will result in rampant inflation. Other parts of the spending will be paid for by future generations. Finally, some will be paid by foreign governments who invest in such debt (making us dependent on regimes, like China).

4. In our modern exchange economy, all payroll and employment come from customers, and the only worthwhile job security is customer security; if there are no customers, there can be no payroll and no jobs.

Labor unions have long tried to create an economic world that is detached from reality. If labor wants job security, they must accommodate customers. There is no other way to assure long term job stability.

5. Customer security can be achieved by the worker only when he cooperates with management in doing the things that win and hold customers. Job security, therefore, is a partnership problem that can be solved only in a spirit of understanding and cooperation.

Unions often want an adversarial relationship with business, but job security can only come if the two are partners pursuing customers together.

6. Because wages are the principal cost of everything, widespread wage increases, without corresponding increase in production, simply increase the cost of everybody’s living.

An example of this is minimum wage. When it goes up, so do prices, and if the job isn't worth the wage, it will be lost. This solves the mystery as to why minimum wage increases are both rare and devastating.

7. The greatest good for the greatest number means, in its material sense, the greatest goods for the greatest number which, in turn, means the greatest productivity per worker.

Production is the best way to keep an economy strong, and those who participate in it growing financially. The best way to encourage productivity is for a government to keep the costs of production as low as possible. This is done through a stable money supply, low taxes, and few regulations.

8. All productivity is based on three factors: 1) natural resources (NR), whose form, place and condition are changed by the expenditure of 2) human energy (HE) (both muscular and mental), with the aid of 3) tools (T).

This is straight forward enough. These three factors make up the totality of the economy. As a formula, this is seen at NR + HE x T = Man's Material Welfare.

9. Tools are the only one of these three factors that man can increase without limit, and tools come into being in a free society only when there is a reward for the temporary self-denial that people must practice in order to channel part of their earnings away from purchases that produce immediate comfort and pleasure, and into new tools of production. Proper payment for the use of tools is essential to their creation.

Tools are the only one of these that can increase without limit. An example of this is agriculture, which was the dominant industry in the late 1700s and early 1800s, with the majority of our population working in that area. Today, the number who work in it are in the single digits and the abundance of food could not be greater. Tools are what have changed everything.


10. The productivity of the tools--that is, the efficiency of the human energy applied in connection with their use--has always been highest in a competitive society in which the economic decisions are made by millions of progress-seeking individuals, rather than in a state-planned society in which those decisions are made by a handful of all-powerful people, regardless of how well-meaning, unselfish, sincere and intelligent those people may be.

The genius of the many individuals when it comes to economic prosperity is always greater than the few or even the majority that would impose its view of "fairness" on the economy. This is the "invisible hand" that Adam Smith spoke of so eloquently in his The Wealth of Nations.

These Pillars are factual, logical, and without a political agenda. They provide excellent benchmarks on what works in the economic system. Pass this tool on to others who are trying to figure out the headlines and let freedom ring!

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

*An internationally accepted working paper developed by The American Economic Foundation

The Squeeze on Entrepreneurs

Over 80 percent of all businesses in this country are created by small business and over 90 percent of all jobs are created by such entrepreneurs, according to the Small Business Administration. It seems that this important engine of economic growth is under a constant state of siege by the government that continually taxes these companies without limits in order to subsidize those in poverty on the one end extreme and to bailout some of America's wealthiest businesses on the other. I cannot recall a time in this nation's recent history where small businesses have been under such pressure and yet have also been more important to the economy's future.

How important are small businesses? According to the SBA, entrepreneurs:

• Represent 99.7 percent of all employer firms.


• Employ about half of all private sector employees.
  
• Pay nearly 45 percent of total U.S. private payroll.
  
• Have generated 60 to 80 percent of net new jobs annually
  over the last decade.


• Create more than half of non farm private gross domestic
  product (GDP).


• Hire 40 percent of high tech workers (such as scientists,
  engineers, and computer workers).


• Are 52 percent home-based and 2 percent franchises.


• Made up 97.3 percent of all identified exporters and produced 28.9 percent of the known export value in FY 2006.


• Produce 13 times more patents per employee than large
  patenting firms; these patents are twice as likely as large
  firm patents to be among the one percent most cited.

The logic behind bailing out failed auto companies and financial institutions is because these type of companies individually employ large numbers of people. If a Ford or a GM go under, tens of thousands (or even hundreds of thousands) will be instantly unemployed and the ripple effect will be more like a tidal wave. However, if the local movie rental place, the convenience store, and sandwich restaurant go under, that only translates into a dozen or so positions. However, thousands of these small businesses going down, on the other hand, paints a much different picture.

The lessons we are learning from government is that obsolescence and a lack of competitiveness are only a problem if your business is small. The larger a company is, the more resistant it can afford to be to necessary change, the less important it is too make tough decisions, and the more likely that company will receive a free pass for poor performance. What type of companies are we going to have if they are not allowed to fail? Companies that are destined to fail at a huge cost to taxpayers who keep them up for years. The biggest victims will be the huge entrepreneurial class who more than carries its own in job creation, but also has among the biggest tax burden.

The government control, subsidy, and even ownership of large businesses has historically been known as fascism. We don't like the term because we think of our enemies during World War II. Unfortunately, if the shoe fits, we are destined to wear it. What is most striking is that this desire to accommodate the most massive of businesses at the expense of small ones seems to transcends party lines. Both McCain and Obama joined George Bush in propping up many big businesses begging to fail. I wonder, at what point, will these small businesses that have a big impact will simply declare "enough!"

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

The American Magazine: Excellent Reading

One of the great things about the Internet is the huge volume of information that is available in virtually every area under the sun. It is also one of the biggest problems with the Internet, creating a massive recycling of content and quite difficult to find anything remotely original.

With that, I was thrilled to stumble on the new American Magazine. The writing is sharp and concise and (more importantly) the thought is very original. It doesn't bore you by acting smart (long and laborious), but by being smart in the way it approaches problems and polices.

One of my favorite sections of the magazine is "The American Scene," which provides windows of what is going on in the economy. Recent articles included:

* The Venti Effect. This article examines the positive impact that Starbucks Coffee has had on smaller competitors. Who would have guessed that a big chain like Starbucks would do the necessary market research to tell smaller competitors where to place stores? Because of Starbucks pricing model, this smaller stores can typically compete quite well when it comes to pricing. This is a very contrarian view of large businesses.

* The Myth of Offshoring Pollution. Extreme environmentalists are continually arguing that the sky is falling, and if there has been any reduction in pollution in the US it is because the manufacturing jobs have been exported. A telling article from the American points out that in areas where there have been higher manufacturing production in this country, there has been a decrease in polution. What is the real cause of reduction? New technology.

* In Ease of Paying Taxes, We're #76. We hear many platitudes about the great free enterprise system in the United States. There is no doubt about it, the US is wildly successful by world standards, but a recent report from PriceWaterhouse and reviewed by the American shows that we are ranked 76 in terms of ease of payment of taxes. We are successful in spite of our system and not because of it.

There are other great articles through out the magazine and it will certainly become "must reading" in preparing for my radio show and writing in this blog. On its excellent website you will also find great audio programs with some of the finest minds in business, politics, and culture today, like this interview with author Tyler Cowen (author of Markets and Cultural Voices).

I suggest spending time with American today.

For a copy of the free report, "Why Your Marketing Isn't Working," email Info@HoustonBusinessShow.com and put "marketing" in the subject line.

Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Congress Poised to Raise Gas Prices

You haven't seen that headline, have you? But the recent hearings being held by Congress on how the tax laws benefit the oil companies gives me every reason to believe that they are looking at legislation that will close "loopholes" in the tax system. Closing those loopholes will, in turn lead to price increases. Why do I come to that conclusion? Because corporations don't pay taxes, they are merely tax collectors.

Simply put, businesses are not philanthropic, but are in the business of making a profit. Taxes on business are always absorbed by their customers either through high prices or lower quality (or both). High taxes will eventually lead those businesses to pursue those options are relocate.

If Congress is doing more than election year rhetoric (a huge possibility, of course), than expect them to raise your prices through what essentially will be a tax increase. Because "closing loopholes" has that exact same effect.

For a copy of the free report, "Why Your Marketing Isn't Working," email Info@HoustonBusinessShow.com and put "marketing" in the subject line.

Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.