Who Killed The Little Man?

Alan Jackson has always been one of my favorite country artists. In fact, one of the few country artists of the last decade or so I consider worth listening to. The other day I was listening to a collection of his greatest hits on my iPod when the song “Little Man” came on.
The song is about small town businesses being shut down by “big money.” Here’s the first three verses of the song for your edification:
I remember walk’in round the court square sidewalk
Lookin’ in windows at things I couldn’t want
There’s Johnson’s hardware and Morgan’s jewelry
And the ol’ Lee King’s apothecary
They ware the little man
The little man
I go back now and the stores are all empty
Except for an old coke sign from 1950
Boarded up like they never existed
Or renovated and called historic districts
There goes the little man
There goes the little man
Now the court square’s just a set of streets
That the people go round but they seldom think
Bout the little man that built this town
Before the big money shut em down
And killed the little man
Oh the little man
I’ve heard this song many times before as it has been a staple of country music radio for some time now, but for some reason on this occasion it got me to thinking. Who did kill the “little man” in Alan’s song? Was it really “big money,” or was it big government? We know where Alan stands, and we also know that most liberals in this country are fond of blaming “big business” for almost all the ills of the world, but it’s worth looking at the other answer.
What poses the biggest challenge to small business owners today? Is it really competition with companies like Wal-Mart, Sears, Home Depot, Applebee’s and McDonald’s? Or is it tax and regulation laws that sometimes cost tens of thousands of dollars, and man man hours, to comply with?
Consider the minimum wage, long championed by populist advocates as helping “the little man.” But does it really? How much does it really help a “little man” running a small business for the government to step in and drastically inflate labor costs? If you’re a small retailer competing against Wal-Mart, for instance, it hurts a great deal. After all, companies like Wal-Mart, Menards and Sears don’t actually pay anyone the minimum wage. But their small-business competitors do, and are often left struggling to make ends meet when labor costs go up.
They can’t exactly raise prices because they’re already being beat there by the larger chains, so they end up cutting back on costs. Which usually means firing some other “little man” people.
Consider taxes, too. On a personal level, how many hours out of any given year do you spend filling out tax forms? Saving receipts? Requesting bank records and keeping track of your income? According to the Tax Foundation, the average citizen spends 20 hours of time complying with the tax code. That’s half a work week, and it’s worse for businesses. Again, according to the Tax Foundation in 2005 merely complying with the tax code cost Americans some $265.1 billion, or about $0.22 for every dollar in taxes collected.
And almost nobody files their taxes correctly. H&R Block, one of the largest tax preparation firms in the world, recently made headlines when the company goofed its own corporate tax filings. Representative John Linder of Georgia (the man behind the Fair Tax movement) said in a recent speech that government audits of the IRS has indicated that the bureaucracy gives out incorrect tax advice on its own help line.
So ask yourself, how is an individual entrepreneur or small business owner supposed to thrive in a tax environment like that? Where simply complying with the tax code can cost thousands of dollars and dozens of hours of time on top of what you actually pay in taxes?
It’s easy for big businesses to comply with our arcane tax code. They can hire a team of accountants to handle it, and if something is done incorrectly they can hire an army of lawyers to fend off the IRS. Your average small business person has to do the taxes himself (or herself) and if they mess up, the IRS takes their business away.
Not a real “little man” friendly situation is it?
It seems to me that if we really wanted to help the hard-working little man we wouldn’t prop up those that won’t provide for themselves by leveraging those that do. We’d make laws simpler to understand. We’d tax less and make the tax code easier to understand and comply with. We’d also pass fewer regulations, and emphasize individualism over collectivism.
Those things would really help the little man, not class envy and diatribes against big business.