The American (Business) Revolution
On our nation’s 238th birthday, a flood of public events, political speeches, and TV specials will remind us of the courage of our colonial ancestors in throwing off the authoritarian government of King George III. The Revolutionary War sparked a movement for democratic government that spread rapidly, eventually serving as an inspiration to billions around the globe.
But the separation from Great Britain was also a revolution for commerce. In the 1770s, American merchants and consumers labored under a burden of high taxes, administrative red tape, and punitive import duties. It was the passage of the Tea Act in 1773, which worsened that burden, which drove the patriots known as the Sons of Liberty to destroy the East India Company’s famous cargo during the Boston Tea Party.
We often forget that the taxes and regulations on tea that the Sons of Liberty found so odious were not just there to raise revenue for the crown. They were what we would call today a case of crony capitalism –a system of government policies that give a company preferential treatment over its competitors. Parliament passed the Tea Act in large part to bail out the British East India Company, which by that time had accumulated such an overstock of unsold tea that it was on the verge of bankruptcy.
While many colonists objected to the government in London imposing taxes on them at all, the policies that led to the Boston Tea Party—and eventually the American Revolution—went beyond that by stacking the deck in favor of moneyed British interests. The King’s government routinely granted exclusive monopolies and privileges to for-profit ventures, often via cozy arrangements that, not surprisingly, benefitted the already wealthy and well-connected.
Americans knew then what most Americans still believe today—that there is nothing wrong with making an honest profit from an honest product. Small merchants and skilled craftsmen thrived throughout colonial America by providing their neighbors with everything from horseshoes and barrels to clothing and beer. When an out-of-touch government raised taxes and passed laws to bail out big business interests, however, they protested the injustice. Sound familiar?
We can learn from our 18th century forebears. When their own government exploited them, they fought back. Economic interests were by no means the only motives for revolution, but they were significant—and legitimate.
Those who object when government policies threaten their economic well-being have long been called greedy or shortsighted. But there’s nothing unduly greedy or shortsighted about wanting to secure the fruits of your own labor. And given the government’s capacity for retaliation, it takes courage to question its greedy and short-sighted policies.
Executives, investors, and entrepreneurs should take inspiration from our revolutionary ancestors. Any government—from a centuries-old monarchy to the U.S. federal government—can overstep its bounds and abuse its authority. Today, instead of monopoly trading rights and mercantilism, we have “green” business subsidies and bailouts for “too big to fail” firms. Ultimately it’s the same problem, and it requires the same solution. Businessmen of good faith need to defend their right to make an honest profit and an honest living.
The merchants and businessmen among the Founding Fathers didn’t shrink from defending their rights, and today’s businesspeople should not either. Fortunately, we have more peaceful tools than were available to the men who signed the Declaration of Independence. Companies can put resources into outreach, advocacy, and public education campaigns. They can leverage their networks of shareholders, suppliers, and customers to weigh in on the side of smaller government and deregulation. They can even tailor their consumer advertising to emphasize the morality of free markets and blunt the appeal of anti-capitalist slogans.
It has often been said, somewhat fatalistically, that in a democracy we get the government we deserve. If we want better than what we have—taxpayer handouts to big corporations, old laws regulating new technology, licensing rules that stifle innovation and entrepreneurship, and the rest of big government’s burden—then we will have to fight to change it. Like their patriotic antecedents, the men and women of the business world will need to step forward to do so.