Comments on: The unhelpful lionization of small business http://blogs.reuters.com/felix-salmon/2011/10/24/the-unhelpful-lionization-of-small-business/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Orlando Woolfolk http://blogs.reuters.com/felix-salmon/2011/10/24/the-unhelpful-lionization-of-small-business/comment-page-1/#comment-54542 Fri, 10 Oct 2014 03:35:59 +0000 http://blogs.reuters.com/felix-salmon/?p=10677#comment-54542 Political deaths aren’t any anathema to Kerala, however killing in Chandrasekharan had been a resonating logo from the collected consciousness in the community. She seemed to be stabbed in the face 49 periods, additionally, the destroying seemed to be carried out not even by motivated cadre nevertheless by appointed murderers. Thus lie the tentacles associated with a unsettling communal trend.

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By: paintcan http://blogs.reuters.com/felix-salmon/2011/10/24/the-unhelpful-lionization-of-small-business/comment-page-1/#comment-32535 Sun, 30 Oct 2011 15:27:03 +0000 http://blogs.reuters.com/felix-salmon/?p=10677#comment-32535 Commuting distance, time and rising cost of employees to reach the bigger employers must be having its effect on employees of the big box stores and other larger firms.

I live in a rural area where all the major big boxes are located in two of three regional cities that have small to middle sizes populations (30,000 to under 200,000). From where I live, commuting distance to the nearest is about a 50 mile round trip. To the farthest, it is about 150 miles RT. That eats into a low wage job quickly.

The town I live in is comprised of mostly small businesses but they are accessible within ten miles. There are only two large employers. One is a chain supermarket and the other is a subsidiary of a European manufacturer. It pays starting wages somewhat higher than locals, and as Felix notes, the locals are not large employers or good paying either. The super market put several smaller groceries out of business over night. The big manufacturer pays some benefits but isn’t generous. I think only management gets any benefits in the supermarket and the pay for most in near minimum wage. The local small businesses seem to hire mostly part timers.

There are several small scale manufacturers within a fifty mile commute south of here. Some of them have been around for decades and some for at least 50 years, I think. And there are several smaller manufacturers of lumber products, sand and crushed stone, some pre-cast concrete products and related building materials in the next town.

What difference does it make to lionize small firms of not? The fact on the ground say that the small employers are more numerous but no amount of praise is going to make them grow. But now, if either of the two big employers go under, the lower wage employees and a large part of the town would be out of luck. The town would have to live of the property tax from some well-heeled homeowners. Its small “downtown’ intersection is made of of four building and only one is occupied.

If fuel costs go up dramatically, the economic sense or even the possibility of working for the distant big firms is going to wither and there will be no room for those job seekers locally. Even the big town employers could face problems with long distance employees who will find their budgets erode just to get to work.

This country was designed for the private automobile and cheap fuel. High fuel costs will have disastrous consequences, especially for outlying suburban and rural areas. And there will be no cheap fuel no matter what anyone does. Cheap fuel makes the distances between towns and cities seem smaller and expensive fuel will have the opposite effect. There are no “emergency management” plans for that problem because I doubt anyone has given the possibility that fuel costs could cripple the country gas could much thought. All the wars in the ME are doing is transferring the costs of fuel security to the federal level and raising the price at the same time.

A possible RX for this difficulty would be to adopt some of the principles of what has been called “the New Urbanism” that tires to create mixed-use neighborhoods that incorporate residential, employment and institutional uses within walking distance. But the real estate collapse will make that a difficult fix now. Many of those most in need of more sensible housing within an easy commute of employment, will not be able to sell their underwater homes without a loss.

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By: klhoughton http://blogs.reuters.com/felix-salmon/2011/10/24/the-unhelpful-lionization-of-small-business/comment-page-1/#comment-32283 Tue, 25 Oct 2011 03:34:05 +0000 http://blogs.reuters.com/felix-salmon/?p=10677#comment-32283 “The typical shareholder in a big business is a worker in some other big business whose pension fund has chosen to invest in that company. Or a retiree who has bought this stock as his or her nest egg. Or it’s somebody’s 401(k).”

More Kinseyian B***S**; you should know better, Felix. The 401(k) shareholder is no more an “owner” of the firm than Curmudgeon’s LLC is NFLX–er, Olympus–er, GM–er…GRPN?

The few hundred–or few thousand shares–are given, at the discretion of the real owners, some scraps from the table in the form of dividends. Or not, if the stock price is appreciating, or at least not dropping, so much as the rest of the market.

The choices of a 401(k) are choices of who might give you the most crumbs. And even if all of those 401(k) shareholders were aware, and worked together–which they won’t–they still hold too little of the company to be able to fix it, the way an owner would.

The great myth of the past thirty years has been the “ownership” society actually encourages–or even allows–small investors to have some “control”: over their investments (generally limited choices offered by the company, including the horrible autocorrelation of company stock), over the way firms are run (look! I filled out a proxy statement telling DIS I don’t want them to give away 1/3 of the company to “go”! Certainly they listened!), and over their own retirement (well, your investments lost 40% of their value–and you cannot write off any 401(k) losses on your tax form, the way real investors may–but look at the recovery the market has made while you’ve been eating dog food and being foreclosed!).

The 99% are more dependent than ever on the 1%. And Kinsey likes it that way; pretending slaves are owners requires overseers, a job he’s perfectly happy to do.

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By: y2kurtus http://blogs.reuters.com/felix-salmon/2011/10/24/the-unhelpful-lionization-of-small-business/comment-page-1/#comment-32278 Tue, 25 Oct 2011 01:54:10 +0000 http://blogs.reuters.com/felix-salmon/?p=10677#comment-32278 There are both pros and cons of small vs large. Contrary to popular beleif large companies pay much better wages and benifits than small ones do for employees. My brother works at Home Depot and they pay only half of their employees a livable wage and offer a weak benifits package. Contrast that grim picture with the reality that the locally owned hardware store pays non-owner family employess even less and offers no benefits at all.

Large companies also pay a much larger share of their revenues in income taxes. This is also contrary to public opnion. Litterally millions of small businesses scrape buy ever year showing little to no net income, yet they allow their owners to take out substantial cashflows due to the accelerated depreciation of financed equipment.

The area where small busineses come out ahead is the distribution of income. One Home Depot displaces 5 local hardware stores. The 5 owners all made about what the 1 home depot store manager makes so in the most oversimplificed example there is a 75% drop in upper middle class incomes when large businesses displace small businesses.

We need both small businesses and large businesses to thrive for the economy to recover. Felix is spot on though that small businesses are put on a pedistal while large businesses are vilified. The reality is somewhere in the middle.

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2011/10/24/the-unhelpful-lionization-of-small-business/comment-page-1/#comment-32251 Mon, 24 Oct 2011 18:46:24 +0000 http://blogs.reuters.com/felix-salmon/?p=10677#comment-32251 TimothyOgden, I disagree with your answer to your first question. There are lots of things we can do to encourage the forming of more start-ups, but they are rejected because they are viewed as “industrial policy” and picking winners. The recent bankruptcy of Solyndra, which received over $500M in government guaranteed loans, will make it even more difficult for governments to create policies and an environment that fosters the creation of more start-ups.

Politicians usually focus on the complaints of executives from large businesses about what they perceive to be obstacles to creating new jobs, but these are rarely the same impediments for starting new businesses. They demand lower taxes and less regulations, claiming this will help job creation, but those are not the kind of obstacles would-be founders face. As someone who has started or invested in more than a dozen start-up tech companies, I can say that those two issues were NEVER a factor in the companies success or failure.

If we want to help more companies be formed, we need to ensure a good supply of capital, talent, and infrastructure. That, unfortunately, isn’t going to happen in the current political climate.

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By: timothyogden http://blogs.reuters.com/felix-salmon/2011/10/24/the-unhelpful-lionization-of-small-business/comment-page-1/#comment-32249 Mon, 24 Oct 2011 17:53:26 +0000 http://blogs.reuters.com/felix-salmon/?p=10677#comment-32249 Felix,

you’ve replaced one form of confusion with another by suggesting a difference between “start-ups” and “small business.” Most start-ups are started up to become the small businesses that employ few people, are low on the productivity scale and survive for only a short time. Only a a small percentage of start-ups intend to grow to any significant size and only a very small percentage of them succeed.

The policy questions here aren’t about start-ups vs small businesses. They are:

* Can anything be done to encourage the forming of more start-ups which intend to grow?
* Can anything be done to increase the success rate of start-ups that intend to grow?

Right now the answers are: “We have no idea” and “History suggests, ‘no\'”

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2011/10/24/the-unhelpful-lionization-of-small-business/comment-page-1/#comment-32247 Mon, 24 Oct 2011 16:51:14 +0000 http://blogs.reuters.com/felix-salmon/?p=10677#comment-32247 “larger businesses are more productive”

Don’t confuse economies of scale with being more productive. Large companies have more overhead, more management, and more rules than small companies, so I’d like to see some of those facts of the matter (evidence) about them being more productive.

Big companies like to boost profits, and when they can’t grow revenues, they cut expenses, which usually means jobs (that’s how they increase that totally meaningless productivity stat, revenue divided by payroll). New companies (and even small ones) can usually only grow profits by growing revenues, and to do that, they usually have to add employees. Both classes of companies do what they need to survive and neither should be placed on a pedestal, but that is virtually guaranteed to happen when politicians look for demographics to pander to.

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By: Curmudgeon http://blogs.reuters.com/felix-salmon/2011/10/24/the-unhelpful-lionization-of-small-business/comment-page-1/#comment-32245 Mon, 24 Oct 2011 14:56:36 +0000 http://blogs.reuters.com/felix-salmon/?p=10677#comment-32245 Your quote from the Kinsley column is misdirection, as you’re intentionally confusing publicly held companies with hundreds of millions in shares with a small private company that is owned by one or a few people.

Despite that, it’s a valid point. I have created several LLCs over the years, and they will never employ more than me. But it is fair to say that small businesses are the most dynamic, and best reflect the concept of both job creation and destruction. And large mature businesses certainly have an anecdotal record of mostly destroying US jobs – IBM, GM, GE (home of our jobs czar), to name a few.

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