Former U.S. Senator George McGovern discusses what being a small business owner has taught him.
George McGovern circa 1992 accompanied by Ivana Trump
After a run for the presidency and a quarter century on Capitol Hill, George McGovern left public service and became the owner of a business -- a punishingly revelatory experience. If only, he says now, his career sequence had been the other way around
Calvin Coolidge was too simplistic when he observed that "the business of America is business." But like most sweeping political statements, even Coolidge's contains some truth -- enough, as I've learned, to make me wish I had known more firsthand about the concerns and problems of American businesspeople while I was a U.S. senator and later a presidential nominee. That knowledge would have made me a better legislator and a more worthy aspirant to the White House.
In 1988 I yielded to a longtime desire to own an inn with conference facilities, where I could provide good food, comfortable rooms, and lively public discussion sessions. A friend of mine, who had a lifetime of hotel- and restaurant-management experience, described the Stratford Inn, in Connecticut, near the respected Shakespeare Theater, as the ideal place for such an undertaking. He agreed to manage it for me if I'd put up the capital.
Without properly analyzing the difficulties of such an endeavor, I plunged into the hotel industry with a virtually impossible leasehold agreement, just as the recession hit New England with unusual force. Given the nature of the lease and the severity of the recession, I doubt in hindsight that either Hilton or Marriott could have made this venture profitable. I certainly couldn't.
After two and a half years that mixed pleasure and satisfaction with the loss of all my earnings from nearly a decade of post-Senate lecture tours, I gave up on the Stratford Inn. But not before learning some painful and valuable lessons.
I learned first of all that over the past 20 years America has become the most litigious society in the world. There was a time not so long ago when a lawsuit was considered a rare and extreme measure, to be resorted to only under the most critical circumstances. But today Americans sue one another at the drop of a hat -- almost on the spur of the moment.
As the owner of the Stratford Inn, I was on the receiving end of a couple of lawsuits that fit that description. In one case, a man left our lounge late one night and headed for his car, which was parked in our parking lot. He got into a fight along the way, and later sued the hotel for not providing more security in the parking area. We did have a security guard on duty, but I doubt that many hotels can afford the kind of extensive security arrangements that could guarantee there will never be an altercation among patrons once they leave the comfort of life in the tavern.
On another occasion, a person leaving our restaurant and lounge lost his footing and fell, allegedly suffering a costly injury. He promptly sued us for damages. Both of the suits were subsequently dismissed, but not without a first-rate legal defense that did not come cheaply.
I am a former history professor, not a lawyer. But it does seem to me that not every accident or fall or misfortune is the fault of the business at which it occurs. Yet lawsuits prompted by such events have spawned a multibillion-dollar industry -- one that drives up the costs of doing business and rendering medical care. Not to mention how it wars against a congenial and humane way of life. We begin to see one another not as compatriots, neighbors, and fellow citizens but as potential plaintiffs and defendants. If we don't stop suing one another for every possible misfortune or alleged negligence, we are going to undermine both the health of our economy and the quality of our society.
The second lesson I learned by owning the Stratford Inn is that legislators and government regulators must more carefully consider the economic and management burdens we have been imposing on U.S. business. As an innkeeper, I wanted excellent safeguards against a fire. But I was startled to be told that our two-story structure, which had large sliding doors opening from every guest room to all-concrete decks, required us to meet fire regulations more appropriate to the Waldorf-Astoria. A costly automatic sprinkler system and new exit doors were items that helped sink the Stratford Inn -- items I was convinced added little to the safety of our guests and employees. And a critical promotional campaign never got off the ground, partly because my manager was forced to concentrate for days at a time on needlessly complicated tax forms for both the IRS and the state of Connecticut.
I'm for protecting the health and well-being of both workers and consumers. I'm for a clean environment and economic justice. But I'm convinced we can pursue those worthy goals and still cut down vastly on the incredible paperwork, the complicated tax forms, the number of minute regulations, and the seemingly endless reporting requirements that afflict American business. Many businesses, especially small independents such as the Stratford Inn, simply can't pass such costs on to their customers and remain competitive or profitable.
I'm not expert enough after only two and a half years as a business owner to know the solutions to all those concerns. I do know that if I were back in the U.S. Senate or in the White House, I would ask a lot of questions before I voted for any more burdens on the thousands of struggling businesses across the nation.
For example, I would ask whether specific legislation exacts a managerial price exceeding any overall benefit it might produce. What are the real economic and social gains of the legislation when compared with the costs and competitive handicaps it imposes on businesspeople?
I'm lucky. I can recover eventually from the loss of the Stratford Inn because I'm still able to generate income from lectures and other services. But what about the 60 people who worked for me in Stratford? 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? Those questions worry me, and they ought to worry all of us who love this country as a land of promise and opportunity.
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George McGovern, former U.S. senator from North Dakota and 1972 Democratic candidate for president, now heads the Middle East Policy Council, in Washington, D.C.