Small is big

[I]“We must not let our rulers load us with perpetual debt. We must make our election between economy and liberty or profusion and servitude. If we run into such debt, as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our calling and our creeds…[we will] have no time to think, no means of calling our miss-managers to account but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers…” [/I] —Thomas Jefferson

In a letter to the editor last week, Rudy Pamintuan from Chicago, Illinois posed some good questions concerning the stimulus bill or any number of other federal initiatives. One was: Will real job creation be possible without salvaging small businesses?

So far we have seen hundreds of billions of dollars being thrown to major corporations, auto manufacturers, insurance companies, real estate companies, and banks to try and stave off the breaking economic dam. It’s obvious that if you throw enough money at a problem, it will sometimes fix itself—or it could encourage the people who helped create the problems in the first place to continue their irresponsible course of action if accountability is diminished.

Billions more are going to be spent on health-care reform and other looming issues exacerbated by those aging baby boomers. These are issues that need to be addressed and will impact millions, but how will it really help fix the economy, create more jobs, and help build a sustainable economic base for continued growth?

Even though one of the primary goals is to reduce joblessness and create more jobs through more government programs, there seems to be little in the stimulus package to address real job creation and self-perpetuating economic growth. Increasing more government jobs will place a greater burden on taxpayers and could help drain the economy. Just look at our situation in the CNMI. Do you think that if we got millions to freely spend, it would be wisely invested to help create more private-sector jobs by assisting small businesses, or improve infrastructure to eventually attract more investors or tourists? Sure, some might be spent on those things, but our bet is that it would be used for pet projects or to create more needless government jobs and programs that do little, if nothing, to improve the economy, but they help “buy” more votes to ensure the status quo.

Instead, it appears that the U.S. is going full-throttle toward a more socialist state of governance where the government has all the answers and solutions to take care of our food, housing, and medical needs. As Rahm Emanuel, the President’s chief of staff said last November, “You never want a serious crisis to go to waste.” And it looks as if this crisis is being milked to the max to fast-forward Big Brother’s political agenda, and make us “glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers.”

The only real sustainable solution toward moving the United States toward a firm financial base is to support and strengthen free market capitalism, and the foundation of it is to support and encourage the creation of more small businesses—not bail out big businesses that created the problems. Small business is really quite big. According to the Small Business Administration’s standards for a small business, a business can have gross receipts of up to $2 million and have up to 1,500 employees in a manufacturing plant, and still be considered small. Approximately 97 percent of all non-farm businesses are considered small by the SBA standards, and they create the majority of new jobs in the United States. So in reality, small is really big because they play a big part in the economic growth of the United States. However, they are practically being ignored in the much touted stimulus bill.

Pamintuan points out that in the most recent available data, small businesses with fewer than 500 employees accounted for almost all net new jobs. “Small firms had a net gain of 1.86 million new jobs, while large firms with 500 or more employees had a net loss of 181,000 jobs. Small firms employed 50.9 percent of the private-sector work force and generated 50.7 percent of the non-farm private gross domestic product.”

Don’t think we’re being naysayers. We would seriously like to see the stimulus bill stimulate some real economic growth, but what we’re seeing so far is doing little to create the changes that will be long-lasting and create more jobs in the private sector—unless one works for a bank, auto manufacturer, the health care industry, or other private and government organizations that are receiving billions in borrowed money. In my gut I believe the long-term affect is going to do us more harm than good. More debt and big government interference means more taxes and a greater burden on individuals and small businesses to feed an ever-expanding government workforce.

Yes, we are going to see change, but is it the kind we can believe in and really want for us, and our children’s future?

[I]“Small business is the backbone of the U.S. economy, creating two out of every three new jobs, employing half the private work force, accounting for 40 percent of America’s total gross national product. And it’s one of the reasons Americans are enjoying this longest era of peacetime growth in the history of our country. But, of course, the magic of small business is not in the power of its numbers but in the power of its dreams, of its aspirations.” [/I] —George (not W) Bush, May 8, 1990

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[I] Rik is a business instructor at NMC and Janel is a partner with BizResults, LLC (www.bizresults.org). They can be contacted at biz_results@yahoo.com.[/I]