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What Small Businesses Can Learn from Massachusetts’ Recent Election . . .
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So it’s been a little while since I’ve blogged about something political, but it’s kind of hard to overlook what occurred one week ago today in Massachusetts. And no, I’m not going to get politically dogmatic here in today’s post . . . those of you who’ve been reading what I write for a while know that I’m a capitalist above all else and vote for whomever best represents the free enterprise system. I firmly believe that business (not government) is the best tool available for economic, social, and political progress. Philosophically, I’m Libertarian, but because I’m a pragmatist, it’s a bit hard to vote that way – – throwing away my vote. All that being said, if you’re thin-skinned, I suggest you stop reading right here . . . just don’t say I didn’t warn you.
Today, I want to point out some lessons from Massachusetts’ recent election for America’s great entrepreneurs and small business owners . . . people like You, who we at Mercantile are most concerned about.

As I’ve been saying for months here on this platform, “the folks in Washington are ignoring small business owners at their peril.” It is an indisputable fact that the Recovery Act (the ARRA – passed in late February of 2009) committed less than 1% of its total funds to America’s small businesses, while at the same time committing hundreds of billions of dollars to Wall Street and other large businesses (AIG, GM, BofA, etc.). The Beltway Bandits have been bailing out Big Business, expanding Government, giving rights to Terrorists, and hoping Main Street continues in its apathetic slumber. Well . . . finally, the pendulum has swung too far to one side and awoken our People. And lately, the forces of anti-business have started losing to the forces of anti-Government.

[By the way, I’ve taken a few shots over the months and years for calling them “Beltway Bandits,” so let me explain once and for all WHY I’ve named them that: too many living and working in the Beltway of our nation’s capitol have been stealing our future and our children’s future for far too long . . . with little consideration for the consequences of their actions . . . just as long as they get reelected or bumped up in pay grade. We have gotten the government we deserve, as one of our Founders foretold . . . a Government mostly devoid of honorable people serving to better our overall national interests, our way of life, and the creed that America stands for. When will noble people of common sense and goodness crowd-out career politicians? When will our Republic function more as one again, rather than as factions fighting for every scrap of pork? When will we lock-away the Bandits and reaffirm our special place in the world?]

At our best, we as a People have always been politically bi-polar – vacillating between them, never trusting one party too much over the other. My mother, who has lived in downstate Illinois her entire life, very wisely tends to split her vote in every election. When I ask her why, Midwestern common sense explains, “That way neither of them gets too much of what they want. Working together, they can check one another.” She intuitively understands that every time we hand the Country’s keychain over to only one of our two political parties, they hit the highway like drunken teenagers in a sports car. It isn’t a pretty sight; it gets ugly and messy.

I would argue that what we’ve been witnessing in Virginia, New Jersey, and now in Massachusetts is a revolt of the common citizenry saying, “Enough! Enough of the demogagoing. Enough of the too-fast-too-furious lurching to one extreme. Enough of bastardizing healthcare reform. Enough of silver-tongued rhetoric accomplishing little.” We are a moderate People. We are NOT a radical People. Some voted for “change” last year, but didn’t quite expect literally radical change or at least threats of it. And it is those threats of more hurdles to come – large tax increases, more regulations, more uncertainty – that is primarily keeping the lid on economic recovery. Show some visibility and economic understanding, Mr. President, and businesses will start hiring and investing again. Continue to muddy the waters, and we won’t dip our toes in at all.

Most reasonable people can understand that our healthcare system needs to be reformed, but reforms must come from both sides of the aisle, not just one. Most knowledgeable people can understand that our justice system has served the test of time and is to be cherished, not tainted by anointing our enemy combatants with the same rights as our American citizens (I’m speaking of the soon-to-be civilian trial of Khalid Sheikh Mohammed only blocks away from Ground Zero). Most of our wise citizenry can understand that when you take more of something, you shrink it; yet when you let people keep more of something, it grows . . . this is the way taxation works and study after study (not to mention the cold, hard facts) bears this out.

The lessons of Massachusetts for business owners are numerous, but below are three key ones to keep in mind in 2010 for your business:

  • Have a positive message and stay on it. Differentiating yourself from the “incumbents” in business or in politics works. Plain and simple. Attorney General Coakley in Massachusetts and others of her party seemed to be negatively bashing the previous Bush Administration STILL, even though those days are long gone. She would have been better served explaining how her party will bring positive, impactful change to the citizens of Massachusetts (in only a few areas – too much “diarrhea of the mouth” about every public policy initiative confuses even the most sophisticated). She didn’t. She mostly reacted to whatever Scott Brown was saying and strayed from what should have been a short set of issues. It had the effect of her seemingly lashing out against him, time and time again and covering way too much ground while she did so, which ultimately watered-down her campaign. The analogies to the Big (In-Trouble) Banks trying to be “all-things-to-all-people” are obvious. At Mercantile, we have stuck to our knitting over the years (providing the smartest owner-user commercial property loans available) and are still standing today, even when many others aren’t . . . many others that originally thought our business model strategy was crazy.
  • Focus on what’s most important, rather than getting caught up in dogmatic principles. In this case, it was (and is) the economy, not healthcare, that was (and is) the most important issue for the citizenry of Massachusetts . . . and frankly, for the rest of the country, too. Just as it was in the Clinton Administration, it holds true now: “it’s the economy, stupid.” Ms. Coakley strayed too far afield – covering cap-and-trade (which most citizens either don’t understand or don’t care much about), tax increases (which everyone inherently knows will be shared by All, no matter how often the Bandits say otherwise), and a healthcare bill so fraught with exceptions and special-interest carve-outs (like Big Labor’s $60 billion giveaway – arguably the most blatantly unfair provision in ANY bill in years and certain to be challenged on constitutional grounds) that it ultimately won’t reform what all that political capital was spent to do. The business example of this is when business owners stay with what they’ve “always done . . . because that’s how we’ve always done it.” Many of these folks don’t or can’t adapt to changing times – what may have been yesterday’s Big issue, isn’t necessarily today’s. And just because you’ve always done it that way historically, doesn’t mean there isn’t a better way today. In business and in politics, it’s the Results that count above all else. The ends must justify the means, otherwise what’s the point? In the case of Mercantile, we’ve always focused on wealth-creation for our small business owner borrowers, yet few other lenders ever tend to mention this primary motive for commercial property ownership. We don’t let dogma cloud our focus on the results we want for ourselves or for our constituency.
  • Populism, or what I’ll call “really relating to your customers” (constituents), really matters. We are currently witnessing the battle of anti-business populism versus anti-government populism . . . and so far, the electorate has been more leery of the latter and rightfully so. Being so against the profit-motive is inherently contradictory to what has made America great. We act like petulant children when we rail against business and the innovations all around us that have made our lives so tremendously comfortable. President Johnson may have had his “War on Poverty,” but President Obama seems poised to have a “War on Prosperity” if he keeps marching forward. In Massachusetts, we saw another example of this with our President’s fixation on Scott Brown’s pickup truck. To me, he unfortunately epitomized the leftwing Democrats’ elitism, arrogance, and distance from the laymen they claim to represent. Outside of Peoria where I’m from, (25 minutes to President Lincoln’s law offices in Metamora, 10 minutes to Pekin where Senator Dirksen was from, and 5 minutes to former Minority Leader Bob Michel’s offices), we used to call them “limousine liberals.” The modern-day equivalent I often say is “Lear Jet liberals.” In business, as in politics, it’s tough to stay a winner when you don’t occasionally get in the trenches. People buy from people they like and who are like them, but if you have disdain for your customers, you’re dead in the water. I guess this is why Gallup just released data yesterday explaining that President Obama is the most polarizing President ever – you can read more here . . . I can’t make this stuff up! Hopefully, our President will soon see that his policies can either garnish applause from his liberal base OR they can help create jobs. It is apparent to me that he cannot accomplish both objectives. It’s time that he steer his ship toward the center, or perhaps November 2010 will bring a rather helpful Clinton/Gingrich leadership split in Washington that once served our nation very well. He’s virtually ignored small business so far, and has suffered for it. Will he now ignore basic economics and suffer even more?

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20 Comments

  1. Robert Sieger says:

    what good is the 504 blog or for that matter the program itself… NO BANKS WILL TAKE THE 1st Mortgage or the SBA

  2. Chris Hurn says:

    Well, Robert… perhaps you’re speaking to the wrong bankers. Our 2009 funded volume actually INCREASED nearly 14.5% over 2008, so apparently some of us were (and are) still lending. Perhaps you should be contacting us if you have an opportunity?

  3. Marshall Clinkscales says:

    Just after the Massachusetts election I wrote this to express my views on the importance of the election. See below:

    Someone said that predicting is a very difficult thing to do especially when it comes to the future. No one can really know what will happen as a result of the stunning election of a Republican Senator in Massachusetts, but I am hopeful that this may be the first shot in the 2nd American Revolution.

    You cannot miss the irony. The first shot in the American revolution was fired in Massachusetts just outside Boston near Concord. The colonists were no longer willing to be controlled and taxed by England. They took a stand, won the war, signed the Declaration of Independence and ultimately the Constitution of the United States of America, all because they did not want a government taking over their lives and taking more and more money away from them. They wanted freedom, and they fought for it and won. The beginnings of our great country were in Massachusetts. In the 200 + years since we have seen government become bigger, more costly, more corrupt and wasteful, and we now see a clear attempt by government to take over even more aspects of our lives and more money from us to support their ideas. Washington is out of control, and we are paying for it.

    Hopefully, the beginnings of the 2nd revolution occurred last night in Massachusetts. Voters sent a strong message by electing Scott Brown to the Senate seat held for years by the ultra liberal Ted Kennedy. Scott Brown said that the federal government was getting too big and too costly. He said the health care bill proposed by the Democrats was too costly and the decision as to how to provide health care should be left to the individual states, not to the federal government. He said the federal government should provide incentives to the states to solve problems in their own way. He said that we were in a war with Al-Qaida, and we needed to realize it and respond. He said Washington needed to get back to fundamentals, be more transparent, control spending and let people keep more of what they earn. He said there were no such things as Republican ideas or Democratic ideas. There were just good ideas and bad ideas, and he pledged to look at every issue and decide what was good, owing his loyalty first to the people of Massachusetts and then to the people of the United States. The people liked what he said. He took on the liberal, big government establishment and won in convincing fashion.

    The 2nd revolution is not over, but it has started. The November elections may be the most important election we have had in our country. We need to elect more Scott Brown types. We must send a message that the people do not give their consent to the way Washington is governing. We need people who will go to Washington to serve us, not themselves, and adhere to the constitutionally mandated form of government we fought for and won. The future of our country and our individual freedom depends on it.

  4. Curt Roese says:

    Chris

    As usual, a very well thought out article, I always enjoy your perspective.

    Of course you know me and that I was a long time small business entrepreneur in the home building industry, who unfortunately did not receive any govt bailout!! There is just no other priority right now than JOB creation!!!

    As a 47 yr old professional, seeking a job and so far unsuccessfully, I am frustrated, stressed, and living a very uncertain future.

    In the past year, I can’t remember one conversation I have had about health care..not one. But, I can recall hundreds about lost jobs, pay cuts, using retirement money to survive, unable to get a job, scared about the future, etc.

    This is all making me sick (oops, I better be careful, no job = no money = no money for health insurance).

  5. Robert Blake says:

    If every incumbent was defeated either dem or repub,the message and the revolution would be loud and clear.

  6. Nico says:

    Thanks for your great support. I feel this is going to help us mtg. brokers with those in need for commerical loan for commerical properties. Will advise of all those we are able to assist.

    Respectfully,

    Nico

  7. Gary Rathbun says:

    Thanks for the blog…….It’s good to know there are some of us left…Or I should say “remaining” . I am still very much in the commercial real estate finance business and will send the next deal to your firm…….Hope it’s real soon.

  8. Rose Lawrence says:

    Regarding your comments: Just a few of mine……..

    The only problem is that business hasn’t done it. In other words, business has not been the solution overall to social, economic and political progress (not that I’ve ever looked for that). However, that is why government is involved to extent it is!

    Business has been extra greedy, and we see the mess that has happened because of it.
    And now hopefully we are learning that , “we are all effected by each other!” We need to also understand that everything we do, is “a matter of the heart!” The politics of business and the politics of government!

    Regarding health care, if the Republicans wanted to fix it–and do it right as they indicate, why didn’t they tackle it over the last 8 years. Their reaction–is hypocritical.

    As a woman, and a minority–no one has ever given me anything; I have always worked hard to achieve. I certainly have not achieved using the “buddy system.” That has not been available to me. Nor have I ever received a grant for business–never applied for welfare benefits. I have worked hard, smart–long hours and been persistent. Tackled every challenge with the creativity that God has given me. And that is the reason why I shall achieve.

  9. Larry says:

    Looking forward to working with you

  10. Chris Hurn says:

    Yes, Robert. The hospitality industry hasn’t exactly been spared the devastation of the “Great Recession.” In order to still be standing and making loans to many others, we cannot do every deal that crosses our desks . . . and unfortunately for you and us, we haven’t been doing that many hotel loans lately. The numbers, if I’m generalizing, are pretty ugly. Sorry.

  11. Debbie Landis says:

    Chris Sir:

    This is John’s wife Debbie. I’m sorry to say we never got the loan. John and I have tried hard to find the money to help us with this restaurant. I never seen so much bull in all my life. The sad part is John works hard and still even the local banks say no. John and I tried through United National Bank and they said it was a go. I hate to say yea it went right out the door. It took the loan officer 2 months to tell us I’m sorry folks but my boss said he couldn’t loan just right yet. I will tell you my theory. The economy is so bad that the banks are afraid to loan money even to people who have great credit scores. John and I have never missed a payment on anything. I would like very much to have a business for John and I. The banks don’t even want to talk to me. The reason is because I’m not the one who works. I do understand that but, I’m the one who makes out the bills. John and I have been married for 33Years. I would work till my hands bleed to help that man. He is a hard worker and a great provider. John is not your everyday man. He worked in the coal mines on his hands and knees and he crawled in 18″ coal. He is a big man he will go 260. The thing that makes him different is he has worked since he was 16 years old. The people around here ask John to work on things for them and even though he has worked 12 hours he goes and does it. That my friend is a true man. Chris I wish you could meet John. He would say to you Sir yes sir or no sir and that is the way he is. When you are face to face he is quite the man.

    No, Chris he wasn’t in the army or any military. He is just a man with great hospitality. I guess by now you can tell that I do care very much for him. John is my prince charming … don’t tell him that though. I paused for a min. to read what I wrote. I guess you can tell by now that John is my best friend also. John and I have an accountant. The restaurant is an open door operation? The reason they are selling is because they are at the age where they want to live. John and I want it so we can rest also one day. I thank you for the letter and by all means call 304-472-5767. The restaurant has a lounge/bar/catering business/and recycling/ and slots. It is located in a great area. It is close to the interstate. It will have some of the best home made meal you ever ate. Paula Dean has nothing on me… I was taught by the best. My grandmother… I started cooking at the age of 9. I can take nothing and make a meal. These kids now days if they don’t have a burger or fries there not even living. I want the people of this town and maybe others to know John. God Bless you Chris and Thank you once again for letting me run my mouth.

  12. Carmen says:

    Chris,

    Thank you for making sense in this non-sense politically owned society. Thinking in Libertarian terms is, in my opinion as well, the only way to save our economy from the soon to come collapse. Keynesian economics is a very dangerous attempt of fixing it and that’s what the clowns in D.C. are doing.

    The issue is how do we get the true libertarians any where close to a political seat without the big money that the Reps. and Dems. have had for the past 100 years? The closest was Ron Paul yet he still goes under the name of Republican and most people would understand why. Other than that, no one had enough money or influence to be exposed 24 hours on the media. Anyone even knows about the great Harry Brown? You’re probably the only one that knows about this (God rest his soul) incredible man that would have done this country a great deal of good.

    And for those that think that it is freedom and capitalism that are the causes of this economic mess I can only say that we have not had real capitalism in this country since at least before Teddy Roosevelt. We’ve had too many presidents that embraced government expansion. When the government intrudes the business man looses. So, no, this is NOT the result of capitalism. It’s the result of government interference and favoritism towards the big monopolies. This is also called Corporatism. And I won’t get started on the Federal Reserve (lots to reveal when you read mises.org) but this is in my opinion affecting our present and our future tremendously.

    Chris, may you be blessed. If we had the majority of people in our country as smart and driven as you are, our country would be in a much better shape. Hey, I would vote for some one like you in a heart beat. Not because I would think that you know absolutely everything but because you have common sense, you believe in the spirit of entrepreneurship which made America the country that used to be, and you would surround yourself with smart people like you.

  13. Larry Garner says:

    It is time someone spoke out about the “Belt Way Bandits”.

  14. Bob D'Andrea says:

    Thanks for keeping me in mind.

  15. W3 Business Advisors says:

    I think in business and in politics it is always good to take a positive approach and never look book. Keep things moving forward at all times.

  16. Richard Vaughn says:

    Chris,
    First of all, I believe you confused ARRA with TARP. TARP bailed our AIG and the banks and Wall Street. ARRA was/is composed of aid to unemployed workers, funding for infrastructure, healthcare, energy, a bunch of tax credits, etc. TARP was passed by Bush and ARRA is Obama’s baby. As of the end of 2009, 19 percent of the stimulus had been outlaid or gone to American taxpayers or business in the form of tax reductions.

    It kind of looks like TARP did what it was supposed to. And I just returned on Wednesday from a meeting with some high level executives from Cisco who showed me some numbers that indicated that the business downturn hit its bottom in April 2009 and has trended upward ever since. And they attributed at least a part of that upturn to ARRA. Lots more to come, like with the new high speed rail we got this week.

    My peers from my industry can corroborate that our businesses have seen substantial growth since early last summer. We are also looking at a very good 2010. My small business is looking at hiring right now and over the next year. Lo and behold, the headlines this morning told us that we just experienced the biggest growth in business activity for one quarter in the last 5 years! So I’m just “speculating” that those programs, both TARP and ARRA where probably the right thing to do.

    As far as Massachusetts goes, its my observation that the Republicans did a really good job at delaying the healthcare bill process through any means possible, whilst stirring up the predictable hoople heads. And it worked. There’s not a whole lot more to it – except to watch what happens next.

  17. Demond Saxon says:

    Chris…I find your comments to be very interesting even though i may disagree with some of your point – ie. prosecuting terrorist in US courts…their not superheros – anyway…i would like to know how do you feel about the recent supreme court 5 to 4 ruling on campaign finance?

  18. Carmen says:

    In response to Richard Vaughn’s input:

    Richard, I am happy that your business is doing well, even though you have not shared with us what business you’re in. You are correct on how the ARRA & TARP money have been distributed. However I disagree with your thought that they were the right thing to do.

    With both programs money have been “created” out of thin air to supposedly help the economy. You appear to be a good business man. Can you tell me that you do not have a budget that you are supposed to work with? If you have a budget (and that’s what every business man works with) then why would the federal government NOT work with one? My point is that if you, as a businessman, were at your budget limit (and not want to file for bankruptcy) and you counterfeited some new money you’d go to jail for that. This is exactly what the federal government has done. And the result will be seen within just a few short years. An Inflation that this country has not seen in a very long time, if ever.

    The other issue is the ARRA that the average individual does not see or know exactly what is all about. Sure, the government uses these wonderful words as “funding for infrastructure, health care, etc”. Notice that every bill and/or proposal from the government is described with the idea that they are there “for the people”. But there is one thing to give a man a fish every day versus teaching him how to fish. Most of the stimulus funds is now going to feed the men. Sure, there is something to teach them how to fish but human nature is what it is. Who would want to put the effort in learning something when they can just sleep all day and receive a fish daily.

    My point is (and you can verify this) that, for example, the ARRA funds projects for Low-Income Housing. Have you ever spent 5 minutes in the “projects”? If you have not please make sure you go there by yourself, at night, and find out for yourself how safe you will be. The working middle class SHOULD NOT have to pay from their hard earned money the construction or rehabilitation of these low-income projects.

    The economy is in a free fall and I don’t see how anyone can explain and justify the trillions in spending and a current recovery. They are just not logical. The growth they are talking about is merely the result of the stock market which is now doing OK ONLY because of the pumping of so much newly created (counterfeited) money by the government. But this will end soon, and the economic collapse is inevitable. The most important thing for business owners and people, in general, is to position themselves in a market that will be “in need” at that time. And all this requires education and of course, effort on the part of the people.

    I wish you well and hope that you and all the businesses out there, including mine, will be very prosperous. Take care!

  19. Richard Vaughn says:

    Well Carmen, I don’t know what to say except to quote an economic term that I heard awhile back, “Trees Grow”. In other words, if you are going to make a bet on something, bet that the economy is going to grow.

    I’m telling you that business is getting better and we are in the middle of a major growth period right now. Those are real numbers, not my opinion. The business people reporting these numbers in my industry (technology) show the results of the stimulus plan having a lot to do with the recovery. You can believe me or not.

    I’ve seen several of these economic cycles and I know that one of the things they all have in common has been an eventual headline saying something like “The economy has been growing at a record pace for 10 straight quarters”…right after 10 straight quarters of negative headlines about the economy.

    If you work in something like the construction industry, its going to take a bit longer perhaps, but recovery is happening.

    I noticed today that Walmarts revenues were down. I’ll bet their results will be followed by better numbers for more upscale stores like Best Buy.

    The signs are all around you. Watch out who you listen to, especially the politicians and the hoople heads – and be ready to move forward when opportunity comes your way.

  20. Shawn says:

    The market is this economy is able to recover very quickly if you are able to look back on last years work.

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