Friday 6 February 2015

Letter From New Zealand (About an American Who Met Reality)

How George McGovern Discovered the Real World

Liam Hehir
Manawatu Standard

. . . I have always liked the story of how former United States senator and Democratic presidential nominee George McGovern came to appreciate this. After losing a re-election in the Republican wave election of 1980, McGovern needed something to do in his retirement years. Having long held an interest in hospitality, he decided to use his savings to buy a small hotel and conference facility in Stratford, Connecticut.

It was not long before a terrible truth dawned on McGovern: being a small businessman was much, much harder than it looked when he was a history professor and a politician. His business went under in less than three years. Most of McGovern's savings went with it.

In the years that followed, McGovern often wrote about his business failure with great intellectual honesty.
He said a big part of the reason his business went bust was that the costs of complying with tightening health and safety requirements had become crippling. Complicated tax rules and business regulations also meant that hotel management had to dedicate a lot of time to form-filling and reporting to various agencies. That left less time to spend actually running and promoting the hotel so that it could attract paying customers.

He also validated two concepts that people drawing a salary from the state or large corporations could sometimes struggle to comprehend.

First, the culture of bureaucracy and compliance hits small businesses particularly hard.  Many of the health and safety requirements that dragged his hotel under were easily absorbed by the established luxury hotels in New York. This was not so for smaller businesses operating in price-sensitive, provincial markets.

Second, many regulations designed to protect employees end up hurting those working for smaller enterprises. When his business failed, McGovern took comfort in the fact he could always make money on the lecture circuit. "But what about the 60 people who worked for me in Stratford?" he asked. "While running my struggling hotel, I never once missed a payroll. What happens to the people who counted on that, and to their families and community, when an owner goes under?"

That real sense of anguish and personal responsibility can come only from bitter experience. It's not something that a bachelor of arts followed by a career in the public service can prepare you for.

McGovern didn't become a Right-winger as a result of all this. He did, however, lament the fact that he only learned what small business people go through after leaving politics. He wrote that, had he been armed with this knowledge before going into public life, he would have made "a better US senator and a more understanding presidential contender".

Oh, well. Better late than never, right? Except that McGovern's epiphany was too late for him to be able to do anything about it (other than letting the experience serve as a useful parable).


Liam Hehir
Manawatu Standard














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