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Smart Businessmen a Myth?
At some point, are we finally going to look at reality? Steven Pearlstein of the WashPost writes that the belief we hold that small businesses create most of the jobs is a myth. The former editor of Inc. magazine unveils a moment of truth behind the curtain of mythology.
Back in the 1980s, I was a senior editor at Inc. magazine, where I worked on some of the articles in which some of the seeds of this myth were planted. Up to that point, there was a widespread tendency to conflate the success of the economy with the fortunes of big business, so it was rather useful to have some data highlighting the importance of small firms.
What he is saying is they ginned up the statistics showing the success of small business in order to cover for giant corporations whose power was becoming too visible. Man, how did we ever become the most successful country in the world before 1980? Good thing we had all these guys looking out for us during the Reagan years and since, or we might have lost a decade’s worth of hard work and wealth.
This is not the time or place for a long statistical explanation. Suffice it to say that, in terms of new job creation, the data show that most of it happens in a small number of very fast-growing companies that are no longer what most of us would consider small. There are lots of reasons for the success of these fast-growing firms, among them the ingenuity and hard work of their founders, the availability of capital and a culture that celebrates risk-taking.
But the dirty little secret is that a lot of small-business job growth has also been driven by the decision of big businesses to outsource many tasks that they used to do in-house. In an economic sense, jobs haven’t been so much “destroyed” and “created” as they have been shifted from one company to another.
So the myth of small business is BS? The great American entrepreneur was one in a million? What about the rest?
The small-business lobby, however, remains just as stubbornly opposed to an “employer mandate” as it was 15 years ago when President Bill Clinton proposed it. Requiring small firms to offer health insurance, they warn, will drive millions of them out of business while sapping from all the others the profits they need to invest and grow. And since small business, as we all know, accounts for virtually all job creation, an employer mandate will stop the U.S. economy dead in its tracks.
This argument, of course, is 100 percent Grade A hooey, beginning with the myth of small-business job creation.
After all, one reason small businesses “created” all those jobs in the first place is that they enabled big companies with generous health plans to outsource work to small companies that had lower cost structures because they offered no insurance at all. If simply requiring those small businesses to offer health insurance would wipe out that cost advantage and drive them out of business, then maybe those companies weren’t the great engines of innovation and efficiency that they always claimed they were.
In other words, we have bought another long-running lie which has led us in the wrong direction. Damn, these guys are good at it.
The truth is businessmen are no smarter or truthful than politicians. Same mentality–how do I get more for me and mine and keep the “little people” from chopping off my head when they sense I’m getting to greedy?
Business cry about government regulations, but most of the regulations still in place are designed to protect business from competition–and from any competition at all from those of us who (once?) worked for them. The natural goal of any business is to eliminate competition and become a monopoly in its market. Government for the last thirty years has fostered the illusion of creating competition while protecting the biggest–and the most generous with bribes (er, campaign contributions).
The strangest comments have come out during the health care reform debates. A few days ago in a town hall meeting, ranking Republican on the Finance Committee and the GOP point man in the debate, Senator Charles Grassley of Iowa was asked in a town hall meeting why the questioner could not get the same health care insurance that Senator Grassley has? Grassley’s reply was first he should get a job with Caterpillar, which isn’t hiring during the (D)recession, and then he crabbily replied, “Get a job with the government!”
Constantly we hear opponents of health care reform saying that if there is a public option, private insurance companies will go out of business because they can’t compete. As President Obama pointed out, they say the government can’t run anything except them out of business? “It’s not logical.”
Of course it is, Mr. President. They are not nearly as smart as they want us to think the are. They can be incredibly stupid, in fact. Michael Lewis writes in Vanity Fair about AIG and how the stupidity of those who worked for its Financial Products division pretty much caused the entire economic meltdown.
On the other hand, Matt Taibbi writes in Rolling Stone about the geniuses at Goldman-Sachs who have managed to steal just about everything they could get their hands on, legally steal it, and they have their hands on everything. While former Goldman-Sachs people sit in just about every important seat in the world, which give the word “oversee” a whole new meaning.
Maybe it is time for that Senate hearing on who caused this recession, as they held in the 1930’s. While Republicans will squirm over their part in the fiasco, perhaps we will finally see as an American public what each of us generally knows: Businessmen are not all that smart. Certainly not smart enough to run the world as they have been doing.
If you don’t agree, when is the last time you had a boss you thought was really smart, as opposed to all of the idiots you complained about to your spouse and co-workers?
I am not anti-business. I am very much in favor of capitalism. That is not what we have had over the past thirty years. Government DE-regulation has fostered monopolism and protectionism of business. I am deeply in favor of competition and the only way we can ensure it is to have strong regulations to protect us from the predators like Goldman-Sachs. Because some businessmen really are that smart.
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Discuss: Smart Businessmen a Myth?
- READER COMMENTS
Right Wayne, you are not anti-business. What a crock. Try to run a business one day under the current regulations. Good luck.
Jacksmith: It is not about greed it is about envy. The WHO study has been discredited and even the liberals on capital hill do not use it any more. You envy other people for what they earned. You want government to take it from me and others and give it to you because you were unwilling to earn it yourself….
One last point for Wayne: How about some facts from you instead of liberal talking points from ultra liberal mags like Vanity Fair. That paragon of journalistic integrity, NOT.
I say put your facts on the table Wayne. Fact one: We are only talking about (at most and this is greatly exaggerated) 15% of the population. That means that 85% of the population is covered. Fact two: People who can afford it come from Canada, France, England etc… to get their health care. Fact three: Old Europe style health care permanently rations health care. England and the heart stents, the lack of a simple MRI machine available in Canada that would have saved Natasha Richardson. This is what is in store….
BTW: Wayne get a job with health care.
AMERICA’S NATIONAL HEALTHCARE EMERGENCY!
It’s official. America and the World are now in a GLOBAL PANDEMIC. A World EPIDEMIC with potential catastrophic consequences for ALL of the American people. The first PANDEMIC in 41 years. And WE THE PEOPLE OF THE UNITED STATES will have to face this PANDEMIC with the 37th worst quality of healthcare in the developed World.
STAND READY AMERICA TO SEIZE CONTROL OF YOUR NATIONAL HEALTHCARE SYSTEM.
We spend over twice as much of our GDP on healthcare as any other country in the World. And Individual American spend about ten times as much out of pocket on healthcare as any other people in the World. All because of GREED! And the PRIVATE FOR PROFIT healthcare system in America.
And while all this is going on, some members of congress seem mostly concern about how to protect the corporate PROFITS! of our GREED DRIVEN, PRIVATE FOR PROFIT NATIONAL DISGRACE. A PRIVATE FOR PROFIT DISGRACE that is in fact, totally valueless to the public health. And a detriment to national security, public safety, and the public health.
Progressive democrats the Tri-Caucus and others should stand firm in their demand for a robust public option for all Americans, with all of the minimum requirements progressive democrats demanded. If congress can not pass a robust public option with at least 51 votes and all robust minimum requirements, congress should immediately move to scrap healthcare reform and request that President Obama declare a state of NATIONAL HEALTHCARE EMERGENCY! Seizing and replacing all PRIVATE FOR PROFIT health insurance plans with the immediate implementation of National Healthcare for all Americans under the provisions of HR676 (A Single-payer National Healthcare Plan For All).
Coverage can begin immediately through our current medicare system. With immediate expansion through recruitment of displaced workers from the canceled private sector insurance industry. Funding can also begin immediately by substitution of payroll deductions for private insurance plans with payroll deductions for the national healthcare plan. This is what the vast majority of the American people want. And this is what all objective experts unanimously agree would be the best, and most cost effective for the American people and our economy.
In Mexico on average people who received medical care for A-H1N1 (Swine Flu) with in 3 days survived. People who did not receive medical care until 7 days or more died. This has been the same results in the US. But 50 million Americans don’t even have any healthcare coverage. And at least 200 million of you with insurance could not get in to see your private insurance plans doctors in 2 or 3 days, even if your life depended on it. WHICH IT DOES!
If President Obama has to declare a NATIONAL STATE OF EMERGENCY to rescue the American people from our healthcare crisis, he will need all the sustained support you can give him. STICK WITH HIM! He’s doing a brilliant job.
THIS IS THE BIG ONE!
THE BATTLE OF GOOD Vs EVIL!
Join the fight.
Contact congress and your representatives NOW! AND SPREAD THE WORD!
God Bless You
Jacksmith – WORKING CLASS
W A Lee you are a jerk. Of course Emperor Liveley has never run a small business. He can’t even hold down a job as a bartender or cab driver. But that does not make his plans for ensuring that the government fills all our larders, takes us to the doctor when we have a cold, and patrols our thoughts for signs of dependence resistance any less compelling. Just think how comfortable our lives would all be if we could get Wayne or his President running things.
Aw c’mon Wayne, your jerkin’ my chain. (New Lyrics to a ditty your dwindling readers are composing.) You are not Anti-business?? You are for capitalism?? Hard to reconcile that with the line of anti conservative socialist excreta you regularly spew. I notice you include a ton of links in your blog. Must be getting kind of nervous about the validity of your arguments. Businessmen are not all that smart? As compared to what? You? Obviously you have never run a small business. (Imagine that.) More government regulation on top of the mountain of B.S. that business owners already have to deal with is your solution to prosperity in America.That speaks for itself.
Nothing but personal attacks in reply. They take the place of facts?
I have run a business, both corporate and my own small business. That does not make me an expert in business. But given what happened at AIG, you don’t have to be an expert to run one into the ground. Even big ones like Citigroup. Good job the GOP did during the Bush years. We are all living so much better.
Not.