Was Arnold Schwarzenegger a Hero or Villain to California's Small Businesses?

Michael Essany Headshot by Michael Essany on May 10, 2011
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Arnold Schwarzenegger is no stranger to playing iconic heroes and infamous villains on the silver screen. Of course, depending on who you ask, the former California governor’s political career has left many wondering if the “Governator” was ultimately a hero or villain to the Golden State.

Although the historians and pundits are now weighing in on Schwarzenegger’s gubernatorial legacy, the actor’s return to Hollywood and freshly announced separation from wife Maria Shriver have already overshadowed what for most ex-governor’s would be a quiet return to private life.

The Debate Begins

While the policies enacted during Schwarzenegger’s tenure will be discussed and debated for decades, California’s massive small business community has arguably felt the effects of the Schwarzenegger administration more intensely than others in the State. Ninety-eight percent of California businesses, after all, are defined as small, with fewer than 100 employees and less than $12 million in average gross annual receipts. With well over three million small businesses calling California home, the actions — and, some would say, inaction — of Governor Schwarzenegger were markedly consequential, particularly during recent years of recession and intense economic turmoil.

“Small businesses drive our economy… and small businesses will drive our recovery during this very difficult time,” Gov. Schwarzenegger stated at the height of 2008′s global economic downswing. “I have friends who come here from Europe and they join Gold’s Gym and before I know it, they become personal trainers and then they have 100 clients and they are making $100 an hour and driving around in Hummers and Corvettes,” he said. “You need to have the vision and the will. You can start something, but you have to be creative.”

But where small business owners differ in their view on Schwarzenegger is whether he was truly creative enough himself when it came to cultivating a small business-friendly economic climate in the State of California. Not surprisingly, the Governator’s supporters point to a litany of achievements during Schwarzenegger’s eventful two terms in office.

Legacy of Leadership in Small Business

In 2006, the Governor issued an executive order reaffirming California’s commitment to 25 percent small business participation in state contracts. In 2009, he made it possible for small businesses to take advantage of billions of dollars in highway funding, including Recovery Act funds. Most significantly, perhaps, Schwarzenegger is credited with moving California towards a “green” economy based upon renewable energy, an accomplishment that may continue to pay economic dividends for decades to come.

The flip-side of the coin, however, paints Schwarzenegger in a different light — specifically, as a leader in over his head at a time when the economy was collapsing, and there was very little the big screen hero could do to save Calfornia in real life. Others concisely deride Schwarzenegger for not making small business a high enough priority, the evidence of which is often cited as the chasm that still represents the disconnect between Sacramento and the State’s myriad small businesses.

As the Los Angeles Times reported in early 2011, a $400-million program set up in 2009 to encourage California small businesses to take on new employees had disbursed only $39.7 million by the start of this year. With more than 7 million Californians employed by small businesses, it was understandable — Schwarzenegger’s critics argued — that the “little guy” didn’t feel looked out for by the larger-than-life governor.

Historians “Terminate” Premature Assessments

While it’s a political impossibility to find any contemporary statesmen who has left public office with universal approval, the five months removed from the Governor’s office don’t provide a clear enough picture of how one man handled the eighth largest economy in the world. Although Californians, for the time being, are mostly unhappy with Schwarzenegger, he isn’t a hated man, Thad Kousser of the University of California tells Time magazine in the publication’s look back at the Schwarzenegger era. “He is not divisive nor scandal plagued, but he’s generally fallen short of changing the political culture of Sacramento and the policy course of the state.”

In the final analysis, it may be far too premature to evaluate whether California’s retired chief executive was ultimately good or bad for small business. Only time will tell the whole story. And that’s precisely why most historians are currently forced to say “I’ll be back” when asked to rate Arnold’s legacy as the 38th Governor of California.

Photo courtesy Wikimedia/Creative Commons, originally posted on Flickr.

Michael Essany Headshot

Michael Essany is a business writer for Intuit and is passionate about solving small business problems.

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