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Book supports small business for economic growth

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Michael Engmann, author of “Greed is Good, Big is Bad: How to Solve America’s Problems” and the founder of several small businesses in the investment field, who also has been in the finance business for close to 50 years, said over the course of 228 years, the American republic has undergone numerous transformations. He said many of those transformations have contributed to the decline of the American economy and America’s failure to keep the republic Benjamin Franklin described.

Democracy, often incorrectly associated with the American form of government and not mentioned once in the Constitution, and Engmann’s description of “America (moving) too far down the path of socialism and (heading) for the same ruin experienced by Russia, China and all other communist countries,” are contributing factors that have reshaped the American republic created in 1787.

In Engmann’s book, he describes how to “return America to the values that once made it so great and to revive the original role of American government,” as well as how to keep the “American Dream” alive. According to Engmann, less big government and more small business is the key factor in growing the American economy.

“The U.S. has to get back to the basics … relying on people to make their own decisions,” instead of the federal government dictating the regulations on how to run businesses and hire people, he said.

Not only are small businesses necessary, he said, but so is shaping policy that encourages small business growth, not discouraging it. His case in point — energy policy.

Engmann said the Obama administration’s unwillingness to make the most of the Keystone Pipeline, excessive Environmental Protection Agency regulations and lack of developing natural resources are all things that “retards economic growth.”

When it comes to producing coal, Engmann said a reasonable clean energy policy is necessary, rather than an adversarial policy so strict that businesses have no choice but to shut their doors. The development of natural gas also should be conducted in a reasonable, non-adversarial manner, he said.

“The more we develop resources and natural gas, the better off we are,” Engmann said.

By becoming more energy self-sufficient, Engmann said only good things could happen: the cost of energy will be reduced; more jobs will be created; dependency on Middle Eastern imports will be lessened; the United States could put potential pressure on the Middle East and Russia, which currently export large amounts of gas to Europe.

Another problem Engmann sees in the way of American economic growth is the exporting of jobs, particularly to China. According to Engmann, the exportation of jobs kicked into high gear with the fall of communism in Eastern Europe in 1989.

Before the Cold War, Engmann said the U.S. and big businesses were more hesitant to export due to not knowing the legal remedies or the legal protocol of what could or would happen. With the fall of communism and by the late ’90s, more and more big businesses became comfortable with exporting and outsourcing, usually at a cheaper expense.

When China became more friendly toward capitalism, big businesses began exporting jobs to China, widening the economic gap and “throwing (Americans) out of work.” As a result, Engmann said not only is America not as competitive in a business sense, but also the middle class is “getting decimated.”

In terms of “Greed is Good,” the greed of a true, small business capitalist is not a bad thing and is different than the greed of, say a king or tyrant, Engmann said.

“The greed of kings is a legacy. No one benefits. (That type of greed) takes from people,” he said. “When you have to produce something … you have to produce something people like so they’ll keep buying it. Promoting incentives for people is good.”

The fact that small businesses have increased liability as opposed to bigger businesses also contributes to a tendency to tread more lightly in order to avoid financial difficulties.

“When there’s risk without liability, people take the risk,” Engmann said. “There’s an upside, but no downside.”

An example Engmann cites is the housing market crisis of 2008. Many big businesses made a short term profit due to handling fees and when stock options rose, executives also had lots of money fall into their laps, Engmann said. In the end, the shareholders got hurt because they were the ones having to pay out the losses, not the executives or big businesses who made the money.

As a whole, Engmann said most people are risk-adverse, especially if they don’t see a vibrant job opportunity. However, he said that by looking at the past, one can learn a valuable lesson.

“This country was built on people taking risks,” he said. “Big businesses don’t encourage creativity. They want rules and don’t want to deviate from the rules or take risks.”

If the economic challenges go unfixed and disability and unemployment benefit costs continue to rise, Engmann said he sees the standard of living accelerating and dropping faster, the deficits getting bigger and the continued bankrupting of the middle class.

“The trend to big business and power is discouraging,” he said. “Big government and big business is too powerful. Small businesses are where business comes from.”

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