WASHINGTON – I just returned from Berlin and Prague, and the question many small business owners in these overseas cities posed for me was quite remarkable: Why do U.S. elected officials seem to dislike business and entrepreneurs?
Good question. As these business owners noted, the U.S. free enterprise system is the envy of and the model for the entire world. So, they asked, why the path towards socialism and government command-and-control?
Of course, I defended many in the U.S. Congress who are tirelessly working to free small business owners and entrepreneurs from excessive regulation and taxation. However, these German and Czech entrepreneurs I spoke with on my travels have a point.
The general legislative direction on Capitol Hill, matched by the content of policy platforms offered by many presidential candidates on the campaign trail (at least by the leading Democrats, which the media covers in great detail and with much enthusiasm) lean heavily toward 1) socialized medicine 2) more workplace and business regulation 3) making “the rich” pay their “fair share” in taxes and 4) pulling back in the global trade arena.
However, as tough as it has been thus far in 2007 with respect to the direction of the business agenda, last week there was a smattering of good news worth sharing. And it came from the most unlikely of places — the courts and federal regulatory agencies.
A Win for the Little Guy Against Lawsuit Abuse
First, entrepreneurs nationwide cheered when a $54 million frivolous lawsuit against a dry-cleaning business in the District of Columbia was decided in favor of the owners. The case, involving a lost (then found) pair of pants, cost the owners nearly $100,000 to defend.
The judge ordered the plaintiff to pay the case’s clerical costs, but the defendants have asked the judge to order “pants man” to cover their hefty legal bills.
Good for them! If "pants man" is forced to pay legal costs, what a message this would send people who are thinking about filing frivolous suits.
A Win for the First Amendment
The Supreme Court rendered a decision that permits nonprofit groups, such as the Small Business & Entrepreneurship Council (my own organization), to use their voice again during the election season.
Prior to the enactment of the McCain-Feingold law, such groups would run issue ads during the campaign season. After the passage of McCain-Feingold, these ads were essentially banned 30 days prior to a primary and 60 days before a general election. Groups and entities that ran ads during this blackout period were forbidden to mention a candidate’s or lawmaker’s name.
But, thankfully, in the 5-4 FEC v. Wisconsin Right to Life Inc. decision, the Supreme Court sided with the First Amendment. As Chief Justice John Roberts Jr. wrote: “Discussion of issues cannot be suppressed simply because the issues may also be pertinent in an election. Where the First Amendment is implicated, the tie goes to the speaker not the censor.”
Groups from across the political and ideological spectrum cheered the decision. While it appears certain there will be more on this matter to come, business owners can more freely use their voice during the election season.
A Message from Regulators: Proceed With Caution
Two federal government agencies released thoughtful reports last week demonstrating that the bureaucracy can systematically and thoroughly review existing and proposed regulatory initiatives and present their findings in a dispassionate manner. Members of Congress should appreciate their work, and take notice.
First, the Federal Trade Commission's (FTC's) Internet Access Task Force issued the report "Broadband Connectivity Competition Policy." It summarized their findings in the area of broadband Internet connectivity.
In particular, the FTC task force looked at the issue of “network neutrality” regulation and concluded that “policy makers should be particularly hesitant to enact new regulation in this area” given the currently vibrant competitive broadband market.
"This report recommends that policy makers proceed with caution in the evolving, dynamic industry of broadband Internet access, which generally is moving toward more - not less - competition,” said FTC Chairman Deborah Platt Majoras. (The report is available by clicking here)
The FTC voted out the report unanimously, 5-0. Individual members of the commission expressed their concern about the “unintended consequences” of pre-regulation such as “net neutrality.” Such regulation, as noted by the many parties that filed comments on the issue, could cause a pull back in Internet investment and expansion, stifling innovation, limiting choices and shifting costs onto the backs of consumers and small business owners.
As noted by Majoras, “in the absence of significant market failure or demonstrated consumer harm” it is better to proceed with caution rather than upend something that is working quite well for consumers.
The U.S. Department of Labor (DoL) also released a report that summarized its findings from a "request for information" about Family and Medical Leave Act (FMLA) regulations and their impact on the workplace. Thousands of public comments were received by the DoL, which the department's Employment Standards Administration (ESA) says will help to identify issues for future discussion. (The report's executive summary highlights key findings, while the full report can be accessed by clicking here.)
"While family and medical leave is widely supported, we also heard from many workers and employers that there are challenges with the way certain aspects are being administered," said Victoria A. Lipnic, assistant secretary of labor for ESA.
The report's findings will help put several important issues into context as Congress looks to possibly expand or enhance family leave or impose some type of paid leave mandate on businesses. In other words, Congress may wish to consider looking at the challenges with existing law before imposing new requirements on employers. One of the key issues identified in the report is unscheduled “intermittent leave,” and the extent to which it is being taken in some workplaces.
“As the record indicated, this is the single most serious area of friction between employers and workers,” according to an ESA release summarizing key findings.
The reports by the FTC and ESA provide Congress with an opportunity to avoid the mistakes and unintended consequences of moving too hastily on legislation without understanding existing conditions. Let’s hope it responds appropriately, not politically.
Hey, a Win in the U.S. Senate, Too!
The Senate failed to advance mandatory "card check" legislation – the number one priority of labor bosses. The deceptively titled "Employee Free Choice Act," which passed the U.S. House earlier in the year, needed 60 votes to proceed to a full Senate vote. The final vote count was 51-48. (See how your Senator voted by clicking here. Also, you can read about the bill in a previous Fox News Beltway Small Business Report by clicking here.)
If passed, the bill would have required an employer to recognize a union if 51 percent of workers simply signed a card stating they wanted the union. No more private ballot, and potentially a lot of undue pressure and harassment by union organizers.
The legislation also contained a provision mandating compulsory, binding arbitration on the employer and employee as part of the collective bargaining process if an agreement could not be reached within the first 120 days of negotiations. How many small firms could survive the inflexibility and new costs of such an agreement?
The bill represented a radical departure from current policy. In essence, the government would no longer be a neutral player in union organizing. The Senate voted to preserve an employee's right to a private ballot, while protecting small businesses.
The U.S. free enterprise system remains a prized model for the world. Now, we just need to remind our elected officials of our well-recognized and well-deserved global reputation. Even these “little wins” should buoy our spirit!
Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council, a research and advocacy group based in Washington, D.C. that works to protect small business and promote entrepreneurship. She is also founder of Women Entrepreneurs, Inc. , an association helping women business owners succeed through education, networking and advocacy. Kerrigan can be reached at kkerrigan@sbecouncil.org .
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