In the United States basketball is a big deal. As I am South African I have not watched a lot of the game but with March madness (the college basketball tournament) about to start, basketball fever is around the corner. I have to say that I do enjoy watching the college teams as anyone can win a game and a lot of them come right down to the wire. Normally during these tense stages of a game the losing team tries desperate defense to stop the other team getting the ball into play and it often works. This full court press while great for basketball defense is not as helpful when the offense is small business and the defense is large business and the government.
This government full court press is at its zenith and the target for the last 50 years appears to be small business. Policies that range from onerous legal procedures to taxes to the "affordable" health care act are crippling the engine of growth, the United States' offense, that is small business. Economies rely on small business for growth and skewing the playing field against these business is having a huge impact on the economic outlook of the United States. Until this full court press is removed the trend that has been slowly set in place over the last 50 years will strangle innovation and the middle class.
The majority of the middle class people get there through hard work and by setting up small businesses. Entrepreneurs see an opportunity and fill that need by starting a small business. They risk their assets to exploit the void and they end up making the market more efficient by improving techniques or innovating technologies and provide consumers with solutions to common problems. They also employ millions of people and give these people the opportunity to prosper if the company is successful. For this reason more middle class Americans can point to their success coming from a small business than any other demographic.
In any economy the middle class is the most important demographic for economic expansion. They have discretionary income that is spent largely on goods and services, they start businesses and employ millions of people and they assist in breaking down the social barriers allowing lower economic classes to move up the socio-economic ladder. Destroy this class and the economy is weak and growth is stagnant.
So it is interesting that a report was published in Bloomberg that showed that small businesses have seen their share of workers drop from more than 50% in 1993 to just over 46% in 2013. In addition small businesses added only 2.8 million jobs in 2013 down from 4.1 million jobs in 1993. This trend will continue until the playing field is leveled however as the playing field has been slowly tilted in the direction of big business and government for the last 50 years, reversing this trend will not happen any time soon. Every year more and more burdensome regulations, taxes, fees and expenses are piled onto the already enormous list and the current administration seems intent on continuing the trend. While large business has teams and budgets to deal with these issues the small business owner does not. If the expense of complying with the new regulations does not drag them under, the time sucked out of their day to deal with these problems bleeds the life out of the company destroying innovation and eroding market share and opportunities.
Until this situation is addressed growth in the United States will continue to stagnate along with poor employment numbers. No amount of Federal Reserve money can kick start this part of the economy, the stimulus has to come from regulators and unfortunately it is looking like more of the same for years to come.
No comments:
Post a Comment