America Ranks Almost Last in Small Business Ownership?
By Ray

I have lived the "American Dream" owning and running my own small business. Our country has always been perceived as the best country in the world to be able to do this and get ahead.  What if I told you that that out of the worlds 22 richest nations, the United States ranks second to last, behind only Luxembourg in the percentage of workers who run their own business. This according to the Organization for Economic Cooperation and Development. When did this happen? How did this happen?

I recently read two articles that highlight how we got here.  These two articles point out how the need for tax revenue by local governments will use the tax revenue generated by existing small business to finance a new store for a major corporation and a competitor.  In the end, the small businessman, whose tax dollars financed the big guy, is put out of business. 

The articles also spell out what the unseen cost's are of decrease in American small business ownership.  Here are some of the more interesting points from these articles.

An analysis by Civic Economics in 2002 indicated that every $100 spent at a chain store makes a local impact of only $13. The same figure for independents is $45.

Civic Economics names factors that drive "the enhanced economic impact of locally-owned firms":
    1.Labor costs, which directly inject money into the local economy through payments of wages and benefits to local residents.  
    2. Profits, which remain in the community in proportion to local ownership;
    3. Procurement of local goods and services for resale and operations; and
    4. Charitable giving, when local firms contribute a greater share of revenue to local causes.

Specific political moves and decisions in Washington over the past several decades have made it much easier for the people who control large-scale corporations to displace small proprietors.

Instead of protecting competitive markets,  they would use anti-monopoly laws to promote "consumer welfare," which they defined largely as lower prices. It no longer mattered how much power was consolidated, as long as the consolidation appeared to result in the delivery of less-expensive goods. A generation after the introduction of this approach, the result is clear. The seemingly endless variety of products in our stores is controlled by an ever smaller number of immense trading companies that, increasingly, charge us higher prices. And we have witnessed the greatest consolidation of economic power since the days of J.D. Rockefeller and J.P. Morgan.

For more than two centuries, small businesses have been a prime source of wealth and well-being in America, creating jobs, bringing better ideas to market, building middle-class communities and, in the case of many immigrants, instilling the practices and values of American society. Today, we can recover the right to make a living by serving our own neighbors and our own communities through our own open markets. We may have to adapt some of our laws to account for new conditions, but the basic models we need await us in our own recent past

Much has changed in the twenty five years I have been a small business owner. Family farms are being taken over by mega world corporations. Community banks are being gobbled up by larger banks. We have a only a handful of small independent grocers left. How many non corporate pharmacies are left, not many! You could look at almost every segment of business that only a few years ago were run by independent operators like myself and now has either been put out of business or been bought out by a mega corporation. The mom and pop shop is vanishing.

I do believe in competition. We all love lower prices but at what cost.  I love going to a local independent hardware store and there is someone right there that knows exactly what I need. I love going to the small local restaurants with recipes rooted in the past three or four generations, instead of going to national chain whose product comes out of a frozen five gallon bucket that came from a central commissary somewhere in who knows where. The choice is ours.

This 2009 small biz trend that was conducted by Zogby shows that Americans have made their choice.  They believe that it will be the small business that will lead us to a better future.





Washington Post

Organization for Economic Cooperation and Development

Reno News Review

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