Fiorina on Making it in the U.S.A.


Heed Carly Fiorina, America:

First, we have to remember what the engine of economic growth is in this nation. You know what it is? Small businesses. Family-owned businesses. Community-based businesses. I started out as a nine-person real estate firm typing and filing. That’s how most people start. Two-thirds of misses are supported by small businesses. We’re crushing them. That’s why we have to roll back this regulatory burden. Take a 70,000 page tax code and make it three pages. Because guess what. When have a big costly complicated government. Only the big, the powerful, wealthy and well connected can deal with it. It’s called crony capitalism. It is why we just reduce the size of government. So, we have to get small businesses up and growing again. To do so, we just reduce the power, the scope, the complexity of government.

… I spent twelve years in the state of California, a state that’s been ruled by liberals for a long time. And guess what you have: about a hundred and thirty billionaires–good for them–the highest poverty rates in the nation, the exodus of the middle class, the destruction of industry after industry after industry. Income inequality is worse under progressive policies, because progressive policies favor the wealthy, the well-connected, and the powerful.

The economy  grows and income inequality goes down when the people with the most motivation — that is, the people for whom another dollar of income is worth the extra work to claim it, however much work that must be — are able to turn their talents and efforts into money.  That means the lowest person on the ladder works for whatever wages he or she is willing to work for (often in exchange for something other than money, whether it’s experience, connections, flexibility, or ease).  The person building a business keeps costs down (in part by offering employees some of those non-cash benefits) and works hard to build a small business into a bigger business.  The larger businesses facing the new competition work to streamline their own businesses, leveraging their own advantages (which will tend to lean toward things like higher pay and security), to keep prices down and spark operational innovations.

Understandably, a lot of people are nervous about the unknowns of it all and the tendency to cheat in a competitive system, but the choice is not between competition and some ideal situation.  The government can’t impose rules without distorting the economics and thereby making it easier to find ways to cheat.  This is most clear, as Fiorina points out, in the degree to which established businesses find that their biggest advantage is in using government to impose barriers on smaller, more-flexible competition.