“Liz Warren is Obama with conviction.” “Liz Warren is Hillary without the baggage.” Actually, the Massachusetts senator is a progressive firebrand whose family issues could cause serious problems for the country. She is dynamic, she has fire in her belly and she hates - absolutely hates – banks.
Why does Liz Warren hate the banks? It’s personal - bankers were mean to her “Daddy.” When Elizabeth Warren was 12 years old, a bank repossessed one of the family’s two cars. Because the bank threatened to take the Warren’s home, too, and because her father was out of work, her mother needed to bring in some desperately-needed money. She weepily struggled into a too-tight black dress, hobbled to Sears, Roebuck on uncomfortable high heels, and got her first-ever job. It was, as Warren recounts in her memoir, the day she grew up.
Her father, whom she calls “Daddy” throughout A Fighting Chance was a serial flop who ultimately worked as a maintenance man “cleaning up around an apartment building” after he had lost his sales job with Montgomery Ward. Earlier in his life he had failed to enlist as a fighter pilot in World War II. After the war he “desperately wanted a job flying” as a commercial pilot, but failed at that, too.
In the 1950s, Warren relates, her parents moved back to their home town, but her grandfather said “my daddy no longer had a job in the family store.” Afterwards, Warren’s father moved “from one job to another,” hauling the growing family of four children all over Oklahoma. Warren’s parents were drinking heavily, fighting constantly. This was Elizabeth Warren’s coming of age.
Warren eventually became a law professor and agreed to teach a class on bankruptcy law. She was driven to the field, as she recounts, searching for why people ended up in bankruptcy court. “I was looking for an answer to a question I couldn’t quite ask out loud, maybe because it was a little too personal.”
This is the root cause of Elizabeth Warren’s lifetime conviction that banks (and, more broadly, businesses) are out to trick and cheat average hard-working families. The childhood fear of poverty not only distorted Warren’s views on private enterprise, but keeps Warren from borrowing money herself. The most recent review of her finances shows that she and her husband are one percenters, holding assets of more than $5 million, but that they owe not a dollar of debt.
Warren, like President Obama, believes the deck is stacked against the middle class. She belittles the contributions of business owners, and tells them “part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.” To level the playing field, she wants higher taxes and more and better regulations – and not just on banks. Not only is the language achingly clichéd, the approach is – after two terms of unchecked regulatory spread – exceedingly dangerous.
A year ago, the Brookings Institute published a study on entrepreneurship and concluded, “Dynamism is slowing down. Business churning and new firm formations have been on a persistent decline during the last few decades, and the pace of net job creation has been subdued.” The drop has been widespread, according to the authors, even in high tech. They caution that if left unchecked, the downturn “implies a continuation of slow growth for the indefinite future.”
The drop in entrepreneurship has accelerated since 2006 – certainly as a result of the financial crisis, when lending dried up for all but those with the best credit scores – but doubtless also because of the anti-business rhethoric and regulation flowing so freely from the Obama White House.
Not all of our competitors have experienced a similar decline. According to Gallup, the U.S. now ranks 12th among developed nations in business startup activity, behind Hungary, Denmark, Finland, Sweden, Israel and Italy. It is especially alarming that for the first time in 35 years, American business deaths exceed business births.
The Obama administration has issued record-setting amounts of new rules and regulations - nearly 79,000 new pages for the Federal Register last year alone, the fifth highest ever. Of the six most explosive years for rule-making, Obama owns five. New regulations on financial, healthcare, insurance and energy companies have proliferated. Most recently, the president demanded that the FCC turn the telecom industry upside down.
Does all this reordering impact entrepreneurs? Of course it does. Just one data point: today some 40 percent of businesses need a license to operate, up from 5 percent a generation ago.
Antony Davies produced a study for the Mercatus Institute comparing the magnitude of federal regulations to productivity for dozens of industries over more than a decade. He showed that “productivity among the least regulated industries is almost double that of the most regulated industries.”
Today we struggle with low productivity, low entrepreneurship and too many people choosing to remain out of the workforce. The president we elect in 2016 will have an opportunity to start rolling back some of the most burdensome regulations, or add to the misery. We know which way Warren will go. Her anti-bank zeal has saddled the country with the Consumer Financial Protection Bureau, an agency that operates with little oversight and that is meeting its critics’ worst fears about overreach. Recent efforts to interfere with how car dealers price auto loans “suggest how prone to abuse this new agency may become,” according to a Bloomberg editorial.
Jim Clifton, the CEO of Gallup, Inc., wrote recently that our “6 million businesses, especially small and medium-sized ones, provide jobs for more than 100 million Americans… [and] have generated the biggest economy in the world.”
He added, “When small and medium-sized businesses are dying faster than they're being born, so is free enterprise. And when free enterprise dies, America dies with it.”
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