We all know the litany of huge corporations who were bailed out by the US taxpayers under BOTH George Bush and Barack Obama (and those who don’t acknowledge the responsibility of both for that irresponsible idiocy are letting your partisanship get in the way of reality) – General Motors, AGI, Citibank, Fanny Mae, Freddie Mac, Bank of America, Chrysler, JP Morgan Chase, GMAC, Wells Fargo, Goldman Sachs, Morgan Stanley, PNC Financial Services, American Express, and on and on and on. The so-called giants of finance and industry standing with their hands out for the biggest welfare scam in history.
But if you read the Wall Street Journal or Fortune Magazine or watch the business news on Fox you’d get the impression that those firms and the rest of the giants are the backbone of the American economy – they were “too big to fail” after all. (This is a perception happily espoused by presidential and Congressional candidates of both parties. This has no relationship to the list of contributors, I’m sure.)
So how can I politely respond to this? Bullshit!
It is small business that is the unappreciated, unrecognized, and largely unsubsidized hero of the American economy. Let’s take a look at some numbers.
From December 2001 through November 2007 the US economy experienced 72 months of economic expansion. Small businesses (those employing less than 50 people) did their part and added almost 5 million jobs – 69,000 jobs per month on average. The big guys (those employing 500 and more people) what did they do? The cut 784,000 jobs over that period. Seven years of growth, and the heroes of Wall Street, the White House and Congress got rid of over 11,000 jobs every month!
Then came the recession. Now anyone with the least common sense and anyone who has walked around their neighborhood rather than just stared at computer screens would say the recession is still with us. But using a no-longer-meaningful definition of a recession (two consecutive quarters of decline in Gross Domestic Product) academic economists, the Federal Reserve, and the Obama administration say the recession ended in June 2009. So what happened during the months of what has been defined as the recession? Well everybody cut jobs. Between the beginning and the end of this period small business employed 4.4% fewer workers. But the big guys? They got rid of over 7% of their workforce.
And since July of 2009 we’ve been in a “recovery” (although god help a sick person whose recovery was this anemic). But small business is again coming through. Over the last 18 months of this so-called recovery small businesses have added almost 1.1 million jobs (almost none of which are attributable to the necessary but wastefully designed $787 billion stimulus program). And what have the big guys done during the recovery? Sat on their ass and their hordes of cash and fired another 150,000 people.
If since the beginning of the recession small business had laid off people at the same rate as the giants, there would be another 3,868,000 people unemployed today.
Now lest you conclude that I’ve joined the Occupy Wall Street movement, you couldn’t be more wrong. Occupy Wall Street is mad at the giants because they’re capitalists. I’m mad at them because they aren’t. The two fundamentals of capitalism are competition and risk taking. The darlings of Wall Street try to eliminate competition whenever possible and the stashes in cash in the corporate bank vaults provides all the evidence necessary that risk taking is not on the agenda. Small businesses are not only the unsung heroes of the American economy; they are the only true capitalists left.