Manufacturing Media Network Since 2013.

The ruinous result of shuttering small businesses

By Bart Taylor March 24, 2020, 10:10 am MDT

To label any business "nonessential" has always been a non-starter. It's anything but to founders, employees, and customers, and to suggest there's any daylight between working and living for stakeholders in America's vast engine of small businesses is naive at best. 

It was only fitting that in Colorado, nonessential beer and cannabis forced a reversal of a blanket "shelter at home" order by Denver Mayor Michael Hancock. It's especially ironic that long lines at cannabis dispensaries forced the mayor's hand. Despite its critics, the industry is apparently more mainstream than ever. In America democracy and capitalism still prevail and in Colorado residents have used both to impose their will.

Capitalism is on hiatus, though, in Washington D.C. As mayors shutter small companies in COVID-19-related dictums, elected officials in D.C. pass on holding corporations to the same high standards as small companies -- standards like managing risk and resources in open markets that always, inevitably, go south.

As I write today, a multi-trillion dollar stimulus package is being finalized that would enable flawed companies to remain unaccountable and reward other brands that bypassed the opportunity afforded by "tax reform" to invest in the future. It's a miserable outcome.

Two years ago I joined the chorus of critics speculating that publicly-funded corporations might use a corporate tax cut -- "tax reform" to supporters -- to fund stock buybacks, enrich shareholders, and pass on opportunities to invest in startups and other capital projects, including domestic factories. In November 2017, I wrote, "Today the corporate class seems comfortable investing in next quarter's profits, not next year's emerging growth company. Tax cuts help the balance sheet. Tax reform, done right, might persuade them differently."

The opportunists who did just that can today breathe easy, assured of massive backstops, as small companies stare into the abyss.

No reasonable person denies the threat of COVID-19. And today, blaming early missteps to contain the outbreak, or the indefensible lack of testing and delay in utilizing the Defense Production Act, seems pointless. 

Denver Mayor Hancock and other local officials across the country would prefer that governors like Colorado's Jarod Polis provide cover with regional stay-at-home orders. As with a bailout plan that doesn't discriminate against bad economic actors, such orders diminish case-by-case decision-making at a local level. 

But small companies can be the engine of the recovery -- with limited staff where necessary. Today, local officials must allow small companies to operate, reasonably, within community lockdowns. Trust us to make responsible decisions. For our part we should encourage our elected officials to regain sight of the long game, of the opportunity provided by tax reform and realization that offshore manufacturing leaves America vulnerable.

As we sort though a $2 trillion rescue package, the wreckage of a small business community that played by the rules should be a reminder that every company is essential. Let's get healthy and redouble our efforts to create new jobs, not paper profits.

Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.

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