The American Dilemma and How We Can Fix It

Posts tagged ‘small business’


When I was growing up, a cartoon appeared in one of the evening New York newspapers entitled, “There Oughta Be A Law.”  It was a one panel piece which depicted some of the stupid things that people do.  Perhaps I should substitute the term “nonsensical” for the word stupid.

The cartoon ran for quite a few years.  Apparently there is no limit to the goofy stuff of which mankind is capable.

Some of the idiotic things in which these people engage are caused by those who seem to live there lives by using as little of their gray matter as they possibly can.  Most of their activities merely inflict disaster on themselves.  But, occasionally, they take their ineptitude into the public sphere where they have the ability to impact any innocent citizen who has the misfortune of being in their presence.  An obvious example is people who drive drunk or use cell phones or text while driving.

To protect ourselves from these people how does our society respond?  Our answer, as in the cartoon is, “There oughta be a law.”  And we do just that – we pass laws and hope that will solve the specific problem addressed in the legislation.

Certainly, until such point that each of us is innately a good citizen, a caring person, a responsible individual, (that day is far in the future), we will need laws so that those who are irresponsible may be punished when they infringe on the rights of their fellow citizens.  But those need to be good laws – laws which truly offer deterrence to misbehavior.  Merely passing a law does not, in and of itself, resolve the behavior we are trying to discourage.

Allow me to offer a simple example.

We all wish that disease did not exist.  I have never met anyone who felt otherwise.  If someone in Congress were to propose a law banishing disease from the United States, I am sure that it would pass unanimously in both houses and would be swiftly signed into law by the President.  Would disease miraculously disappear as a result of this enactment?  Of course not.

The first two years of President Obama’s administration produced two laws, The Affordable Care Act (Obamacare) and Dodd/Frank (intended to make sure that we never again faced a similar banking crisis to the one we endured).  Both laws, as they have been presented to voters seem, on the surface, to be good things.

I come from the K.I.S.S. school of management (Keep It Simple Stupid).  Both of these laws exceed two thousand pages – hardly what anyone would consider to be simple.  In fact, they are so complex that to date no one, including those who voted to adopt them, knows what they actually contain and for what they provide.

Why are these two laws so important?  Because, if you listen to the voices of small businessmen, not understanding their implications is the primary reason that they have been reluctant to hire new workers.  And that is the reason that our economy is still sputtering along at a 1.3% growth rate rather than the 4.0% rate that President Obama predicted as a result of his stimulus plans.

Should this matter to any of us?  Well it certainly matters to those who are still actively seeking work and continue to be unemployed.  And to those of us who are fortunate to have a job it matters because it is one of the primary reasons that our national debt load (what each man, woman and child owes) now exceeds $200,000 per person.

I have no doubt that these laws were passed with the best of intentions.  Nevertheless, “the road to hell is paved with good intentions.”

This entire concept might be lost on the average person – particularly if he or she does not own their own business.  So let me offer an example of how laws can affect real people.

Many years ago in Chicago I was approached by a gentlemen whom I knew from the neighborhood.  Pete was a real estate agent, but his interest was less in selling houses than in trying to develop run-down properties and turn them to productive use.

One such property housed several small retail stores but the major tenant was a package liquor store.  Together with a number of merchants who operated their businesses in a part of Hyde Park known as Harper Court, which was directly behind this row of buildings, we were able to buy this property.

The buildings had become rundown and the liquor store was a haven for people who would panhandle outside it from anyone walking by – hoping to collect enough change to buy a cold quart of beer or a pint of alcohol.

The constant presence of these people, sometimes they were very aggressive and would follow a possible donor down the street until the person gave in and “contributed,” meant that the police spent a lot of their time patrolling the area and asking these people to move along.  Robberies near this property were frequent.

When we acquired the property the package liquor store’s lease was six months from expiration.  We chose not to renew it.  We performed all the maintenance which had been deferred, spruced up the outside and found a new anchor tenant to rent the space which the liquor store formerly had occupied.  It was an upscale restaurant which became one of the more popular, nicer places to eat in the neighborhood.  The neighborhood saw a significant improvement in terms of appearance and safety and the investors got a decent return on the capital which we had risked.

With that background, when Pete came to me with another real estate venture, I was naturally interested.  But this project was significantly bigger in scope and size.

Hyde Park had a fairly high percentage of the elderly – so many so that a number of residents coined the phrase to describe it as, “The Florida of the North.”  While there was one “old age home” in the neighborhood, run by the Episcopal Diocese of Chicago, it was small and insufficient to accommodate all the elderly who lived alone and would benefit from being in a more closely-supervised environment should they take an unexpected fall or experience a medical emergency.

Pete knew that there was a large apartment building for sale in east Hyde Park.  It needed extensive renovation and work to bring it back to its former standards.  But it would have been an ideal place to situate a retirement home/skilled nursing care facility.  This was a big project and so Pete presented it to those of us who had invested in his first project, as well as a number of new potential investors.

Pete had, as in the first case, done his homework.  He had prepared detailed financial projections for the cost of acquisition and renovation and had secured a guarantee of financing from the Hyde Park Bank.  We were enthusiastic about the project.  Most of us knew elderly people who lived alone and we saw the need for this kind of facility.  There was only one possible fly in the ointment.

The building was sixteen stories tall and had two stairwells servicing its two sections.  It had been constructed in the 1940’s with the solid materials with which buildings at that time were built – real lath and plaster rather than the plasterboard which is used today and the water was delivered to each apartment by copper pipes, not PVC.  It was a rock solid building but needed a new roof and tuck pointing – both very extensive items, the cost of which Pete had incorporated in his analysis.

The fly in the ointment was that the risers in the stairwells did not meet the current city standards for retirement/nursing homes.  They were 1/8” too high.  In order for us to obtain licensing to operate that sort of facility, we would have to rip out 32 flights of stairs and replace them with stairwells that met code.  Despite the involvement of community leaders, all testifying that this project would be a tremendous asset to the neighborhood and would be a great benefit to our many elderly citizens, the city administrator who had responsibility for oversight remained inflexible.  “The law is the law.”

The cost of redoing the stairwells made the project impossible to accomplish.  The building we had hoped to acquire continued to deteriorate to the point where it was an eyesore and it was twenty years before the Episcopal Church replaced “The Church Home” with a new, modern and larger facility when a motel which had fallen into disrepair was purchased and demolished by them.

Think about what was lost through bureaucratic astigmatism.

This could have been a home where 280 of our elderly neighbors would have received first rate care and attention which was denied to them; renovating the building would have meant giving six months’ work to roofers, tuck pointers, plasterers and painters, carpenters and mechanics – all of whom would have been union workers; and we never hired the staff of 60 permanent people who would have overseen the care of the residents and provided for their comfort.

Now think about the illogic of requiring that we gut the stairwells and rebuild them.  The stairwells in a high rise are designed for emergency use.  Most of us would prefer taking the elevator either to climbing or descending 16 flights of stairs unless we absolutely had no other choice.

Because the building was well-constructed, it was unlikely that, should a fire occur, it would spread uncontrolled, requiring the evacuation of the entire building.  But let’s say that were required.  Would a 90 year old with a walker, be any better or worse off with stairs that were 1/8” lower than the ones which had been constructed when the building was erected?

There are laws which we pass that are so complex that they have a negative impact until their specifics are clear.  There are other laws which are so specific that they have a negative impact despite their original good intentions – such as the city ordinance regarding the height of stair risers.

If we feel that “there oughta be a law,” we should be certain that the ones we pass are good ones.  Otherwise, we may wind up getting far more than that for which we bargained.


First we had nature – she gave us cowslips;

Then we had President Obama’s election – he gave us pink slips;

And now the President has created his very own special brand of gaffes which I have named in his honor, Obamaslips.

“You didn’t build that,” has now become a household phrase in the vocabulary of everyone who believes the President’s greatest achievement after nearly four years in office has been to make former President Jimmy Carter look good.

But let’s take the man at his word (great leap of faith required here) and say that this comment was taken completely out of context.  I can almost buy into that since I’ve been listening to the President’s attack ads and I believe his staff has mastered this technique and knows what “out of context” is all about.

Okay, what the President was really saying was, “Small business people didn’t build the infrastructure which enables them to engage in their livelihoods.”  By the way, it also enables all the rest of us who expect to see water when we turn on the faucet or flush the toilet; expect that when we drive we are going to be able to cross bridges that are safe and roads that don’t have pot holes; and when we flip on the magic light switch, we expect to find our rooms and our lives lighting up.  We didn’t build those either.

Well, by building the infrastructure I mean we didn’t (or most of us didn’t) go out and pick up an axe or a shovel and start the process that once represented the greatest achievement seen on earth since the Romans.  No, we didn’t physically build it – but we paid for it to be built.  That is true of the person who works for someone as well as for the owner of a small business.

When I bought the house in Las Vegas in 2001 it came with a separate special present.  That was a bill for the infrastructure that had to be built as the city spread out further and further from the Strip.  The City advanced the money in order for this to be completed.  But the ultimate cost of funding it was borne by the individual homeowner or rental apartment building or the person who took the chance to construct a small shopping mall so that your favorite fast food restaurant was only a short drive away.

As I recall, this originally amounted to about $8,000 for my house, but I don’t know the exact number as I wasn’t the original owner.  By the time I inherited this bill it was down to a little over $6,000 – and while the City had floated a revenue bond and was paying interest of 4.5%, the homeowner was being charged 8% on the outstanding balance.  (It’s kind of like big bank borrowing/lending – but not as profitable).

Well I paid off the balance since it was hard to get a guaranteed return of 8%, but I always wondered, how much competitive bidding went into this infrastructure build out?  After all, if you’re going to pass the costs along to a third party who has no say in the matter, does it really concern you whether you’re getting the best workmanship at the best price since someone else is paying for it?  But that’s a conversation for another time.

Let’s get back to the fantastic highway system that President Eisenhower constructed, connecting us from east to west and north to south.  This was a project that was admittedly undertaken by the Federal government and not by small businessmen (or any of the rest of us).  It was one of the great American achievements of the 20th century.  But where did the money for this project come from – and how was it paid for?

Well, the part of the equation that President Obama doesn’t understand and I suspect never will is that the American taxpayer may not have been out digging ditches or operating heavy equipment to move boulders and mountains, but we, each of us paid for it with our tax dollars.  And more than anyone, small businesses contributed the most to this enterprise.

The decades of the 1950’s through the 1980’s saw an explosion in the number of small mom and pop, entrepreneurial business come into being.  They couldn’t have existed before the interstate highway system was developed.  But they could exist and thrive once that system was in place.

As they grew, they paid more and more taxes because they earned more and more income.  And their numbers grew and they hired more people to work in their roadside fruit and vegetable stand or at the little gas station that they had opened.  And the economy exploded into one of the greatest periods of prosperity in the history of our country.

That highway system paid great dividends – and people realized the benefit that they had received and were happy to pay taxes for something which had given them an opportunity for a new and better way of life.  Respect for those in Washington was probably at the highest level since George Washington was in office.

Today we find ourselves with a group of political Aristocrats who exhibit, with few exceptions, none of the greatness and little of the pride that was widespread and commonplace among our legislators and presidents of fifty years ago.  We find small-minded people, bickering over who is most deserving of the best and biggest piece of meat to be carved from the still barely breathing wounded animal.  So absorbed in their petty fighting, they do not see that the buzzards are circling overhead what soon will be merely a carcass.  And the buzzards will strip it to the bone.

I guess what President Obama said is in fact true – “We didn’t build that.”  But if we continue to elect men and women to public office with miniscule mindsets and self-serving petty agendas, “We will all pay for it.”  And the price will be dear.


I used to pass Becker’s Hardware several times a day.  It was one store south of the corner of 78th Street and Lexington on the west side of the street and was on my way to school.

Although I had only been inside once when my dad sent me to pick something up for him, I loved that store – particularly after Thanksgiving.  The window display which normally contained hammers and workboxes and hand saws was replaced for the Holiday season by a little mountain, train tracks and a small Lionel train.  The train consisted of an engine, a coal car, a lumber car and a caboose.

On the window Mr. and Mrs. Becker had installed a round silver circular disc, and if you put your hand on it, the heat from your body activated a switch and the train made one trip around the mountain and then came to a halt.  There was always a line of kids wanting to send the train on its journey – including me.  It was one of the little Holiday traditions that I loved as a child.

One Friday evening as we were sitting in the living room one of the lamps began making a noise.  Suddenly it went out and there was a smell of something burning.  Dad quickly unplugged the lamp from the wall socket and began examining it.  He saw that the lamp’s cord was frayed.  As it happened, this lamp was one of mom’s favorites – and she naturally wanted it repaired.

Dad sold lamps – and he always had a large supply of wire for them as they were made to order for his customers.  Normally, he would have gone to the office on Saturday, picked up some wire and brought it home to do the job.  But this Saturday we were scheduled to go to Tice Farms in Woodcliff Lake, New Jersey to get peaches, which were in season.  Grandma used to buy a half bushel of them and freeze them for our enjoyment during the winter.

Of course, I was looking forward to the trip.  Tice Farms also made their own ice cream.  Their peach ice cream was so smooth and creamy and loaded with large chunks of fruit.  It was one of my favorite food memories as a child and still is to this day.

So the next morning dad and I went to Becker Hardware to buy a length of electric cord so he could repair the lamp.  When we walked in, the store looked as it had the one time I had previously been there.

Neatly organized along the wall behind the counter were row after row and drawer after drawer of all sorts of hardware things.  Washers, nuts, nails, screws all clearly marked with their size.

Mrs. Becker was helping another customer when we came in, but she took the time to say, “Good morning.  I’m just finishing up and will be with you in a moment.  Thank you for coming in.”  She said it with an obvious sincerity which was the way that small business owners attracted and retained their customers.

“Okay, Fred, let’s see.  We have seven washers at three cents each.”  As she said this she wrote that down on a little piece of paper.  “Twenty-two nails, two cents each … four nuts – five cents each …”  And she continued until she had tallied up Fred’s entire order  – which amounted to $1.40 plus four cents sales tax.  She handed the sheet to Fred for him to check for accuracy and he handed her two dollars.

Mrs. Becker asked him if he would like a bag for each item or would it be okay to put them all together.  Fred said one bag would do.  So Mrs. Becker scooped everything into a little paper bag, reached under the counter and pulled out her cash box.  It was a colorful kid’s lunch box.  She put the two dollars in and hunted around for fifty-six cents change which she gave to Fred who thanked her and left the store.

She then turned to us and said, “How are you today?  May I help you?”  Again, her cheerfulness radiated in her questions.

Dad had brought the old wire with us and said that he wanted to replace it.  Mrs. Becker looked at it and said, “Oh my goodness.  It’s a good thing you were home when this shorted out.  It might have started a fire.  Well, we’ll get you all fixed up.”

She took the old wire and measured it against new electric cord which was hanging in a roll on the wall and cut the appropriate amount.  “Do you want a new plug as well for it?”, she asked.  Dad thought for a second and said, “Sure, let’s get a new plug as well.”  So she went to her “plug” drawers and found one that exactly matched the old one.  She then folded the cord and was going to put it and the plug in a bag when dad said, “We’re only just going around the corner.  You don’t have to bother with a bag.”

Mrs. Becker said, “Oh, thank you.  You’d be surprised how much those brown paper bags cost.  I appreciate it.  That will be $1.12 including tax.”

Well, dad and I took our wire and plug home and the family headed off to New Jersey.  When we returned, my mind still thinking about the wonderful ice cream I had enjoyed and the frozen peaches which were coming that fall and winter, I was content.  Dad immediately set to re-wiring the lamp, which took him about fifteen minutes – and mom was happy that one of her favorite lamps was again operational.  All was well.

I thought about that experience at Becker’s Hardware the other day.  Several of my landscape lights had decided to burn out simultaneously and I wanted to replace them.  So I went to one of the hardware “superstores” to find new halogen bulbs.

I knew where the lighting section was in this store so I anticipated just going in, making my selection and using the self-checkout to finish my purchase.  I didn’t want to spend a lot of time there as I had Gracie with me in the car and, although it was early morning, I didn’t want to expose her to the rising temperature any longer than necessary.

Of course, having made the tour of the bulb aisle I couldn’t find what I needed.  I went to customer service and asked if they allowed companion dogs in the store.  As it turned out, they did.  So I went back to the car and brought Gracie back with me.

Then I began looking for an employee who could help me locate my bulbs.  I was glad that I had retrieved Gracie as trying to find someone to help me took almost fifteen minutes.  But I finally succeeded in locating one of the store personnel who knew where the bulbs were.  Of course, they were right in front of me.  I had just missed them.

When we returned home I set the bulbs on the counter.  Then I looked, I mean really looked, at my purchase.

The bulbs themselves measured 1/2” x 1-1/2”.  The packaging which held them measured 3” x 6”.  In other words, we had 18 square inches of packaging to hold 3/4 square inches of product – a twenty-four to one ratio of packaging to product.  What a waste.  And I couldn’t help but wonder how much of my $4.98 per bulb cost was because of that packaging and not the product it contained.

Of course, when I removed the bulbs I did put the packaging in my recycle bin.  I am not sure whether the plastic component will actually be recycled or just get pulled and sent to a landfill.  I removed the cardboard inserts which held the bulbs in place and am hopeful that they at least will find their way back into a new life as something useful.

It’s been many years since I went into Becker’s Hardware.  I would be surprised if the store is still in business.   But I can still hear Mrs. Becker thanking dad for sparing her the expense of a brown paper bag.

With the way we purchase and package products today, what is the cost – not just in terms of our out of pocket expense – but the ultimate cost, the denigration of our most precious resource, our environment?  I’m guessing it’s pretty high.

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