Archive for July 2012

Why Attack Small Business?

In response to commentary in the Minneapolis Star Tribune, SBM President Kelly Guncheon offers a rebuttal:

“Bigger is better” is not a philosophy that will resurrect our economy.

As leaders in the small-business community, Small Business Minnesota would like to respond to the misrepresentations and huge gaps in logic in the July 15 commentary “Small business is getting a tad too much love.” They are too numerous to respond to in the space allowed for rebuttals, so we’ll address the biggest misrepresentations:

• “In a recent Harris Poll of more than 1,400 small businesses, two-thirds said they would not increase hiring this year.” Perhaps, but what choice do they have? Small businesses find capital extremely difficult to obtain because banks have tightened their lending strings, and they don’t have the capital reserves that big corporations do. Also, in an improving but still-struggling economy, small businesses can’t create demand any more than big businesses can.

• “Countries with the lowest percentage of workers employed by small business … are some of the strongest economies in the world.” There is no evidence that this is anything but a coincidence.

• “Small businesses are, on the whole, less productive than big businesses.” Agreed. Economies of scale benefit large producers. Large corporations are also very efficient at avoiding taxes, outsourcing jobs, sheltering profits and awarding disproportionate compensation packages to top-level executives and CEOs. How are any of these good for our economy?

• Small businesses are a “contemporary embodiment of many pre-industrial ideals still cherished by small business and trumpeted by politicians today.” The author’s cynicism is befuddling. Why does he belittle the tenets of small businesses: hard work, invention and persistence? And why does he ignore the fact that every large corporation started as a small business?

The author cites a New Yorker article that presents Wal-Mart as an example of a model corporation that outshines small businesses, largely because of its prices. In so doing, he ignores how Wal-Mart, the bane of small retailers everywhere, has hurt the economy by reducing the buying power of millions of people by virtue of its cheap imports and low wages.

Meanwhile, small businesses create the vast majority of jobs in this country and are vibrant contributors to our economies and communities, especially in small and rural areas.

To the contrary, many large corporations have reduced American jobs and the puchasing power of employees, exported jobs to countries overseas, withheld rather than invested profits into their companies, and displayed allegiance to executive compensation and shareholder return over domestic workers and economies.

“Bigger is better” is not a philosophy that will resurrect our economy.

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Kelly Guncheon is president of Small Business Minnesota, a statewide association.