On a recent Van Wie Financial Hour, and also in a recent Blog, we have discussed the topic of small business financing for startup and growth. Years ago, money was plentiful, entrepreneurs were able to fund their startups from individuals or local banks, and regulations favored growth and expansion for small businesses. Over time, regulations have become more onerous, startups diminished, and a large portion of entrepreneurial spirit has gone unsatisfied. Such a shame, I believe, as evidenced by statistics showing that for the past few years, business failures actually exceeded startups.
How many times have we heard the term, “The New Normal?” Do you accept that? I do not. Stifling an economy through increased taxation and regulation has only two possible results; economic stagnation, and/or recession. In recent decades, we have experienced both. It has become a pervasive and universal problem. In my opinion, it can be attributed to a simple cause; too much government.
President Trump campaigned on a simple economic premise; deregulating and reducing taxes on the business community. We are well into year two of implementing those concepts, and the results are clear. It works every time it is tried.
Everyone knows the adage, most often attributed to Albert Einstein, that insanity is doing the same thing over and over, while expecting different results. Nowhere is this more applicable than in government regulation. Financially, regulation is a strangler of economic activity. More regulation makes things worse, not better.
Why, then, do so many people believe that cutting taxes and reducing regulation will not lead to economic growth and prosperity? After all, every time it was tried, growth and prosperity resulted. Yet resistance is commonplace and widespread. It has taken a Washington outsider (Trump) to revive the basic concepts of economic growth.
The numbers are coming in; it is working. Economic growth is accelerating, unemployment is dropping to record low levels, and tax revenue is rising, reflecting increased economic activity. In short, America is once again prospering.
This past week, a giant step was quietly taken by the Administration to further deregulate financial institutions. The Dodd-Frank Wall Street Reform and Consumer Protection Act was passed by Congress in a knee-jerk reaction to the financial crisis of the prior decade. President Trump signed an easing of this onerous law last Thursday. The result will be added prosperity, brought about largely by the ability of local financial institutions to finance business startups and growth. While a total repeal of Dodd-Frank would be helpful, this is a good start. The Administration is promising further rollbacks in Dodd-Frank-based regulations.
As Americans, we remember tax cuts, and we remember deregulation. We also remember the prosperity that ensued. We are currently enjoying the results of the current Administration’s policies. Help for small business, job growth, and economic prosperity is on the way.
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