Why dismiss growth potential of small business?

Leo Hindery, Jr.

Recently in a Huffington Post blog, Mr. Leo Hindery, Jr. convincingly argued for our country to pursue two courses for re-energizing our manufacturing economy -- to create the jobs we desperately need.

Value-Added Tax and Domestic Sourcing
He proposes that, “a large part or all corporate income tax” be replaced with a value-added tax and that the U.S government use its enormous purchasing power in an “all-of-government domestic sourcing” program.




I encourage you to read Mr. Hindery’s blog because it deserves serious consideration.

But if you do, skip the first four paragraphs.

No Love for Small Business
Mr. Hindery seems to have a chip on his shoulder against small businesses. He is offended that so much emphasis has been publicly placed on the proposition that small business must play at vital role in the revival of our economy. He calls it a “love affair with pumping up small businesses.”

Mr. Hindery believes that the Obama administration should be focusing on creating manufacturing jobs and stop emphasizing small business growth.

He maintains that we need 22 million new jobs and that the “simple truth is that there is no way on God’s green earth to create this many jobs without the massive – and primary – involvement of big manufacturing business.”

“Big” is the operable word in Mr. Hindery’s statement. Not any manufacturing business, only “big” manufacturers are worthy of a jobs creation effort by the U.S. government.



He concludes, “And it’s long past time for our government to stop equating a job in a sub shop selling sandwiches to a job in a manufacturing plant making real products for domestic competition and export.”

It is unfortunate that those with a big business mentality are so dismissive of small businesses in general and jobs in a small business in particularly.

Upturned Noses in Big Business?
This big-business snobbery rejects the position that a job is a job is a job. For these elitists, only jobs provided by a big business are worthy of pursuing.

Accordingly, Mr. Hindery believes that only big business can create the jobs we need to get to his goal of 22 million new jobs.

First, big businesses are important to our economy. (How else would SC have recently ranked #1 in economic growth potential? See Brad Warthen's post on the ranking published in Business Facilities magazine.) You never hear a small business person say otherwise.

So why do big business folks not want to recognize the importance of small business?


Here's Why
The reason is pretty simple. Big business types were quite satisfied with political platitudes about small business as long as this was only public relations rhetoric -- as it has been for years. But as soon as our elected leaders actually get serious about taking steps to help and protect small business (i.e. health care reform, Wall Street reform, and the Small Business Jobs Act), big business advocates show their true colors.

Such efforts represent a threat to big business' total control over Congress, and they don’t want to share any power or be subject to responsible regulation.

90 New General Motors? Not in This Lifetime
The proposition that big manufacturing alone can generate meaningful numbers of jobs is also short sighted.

Mr. Hindery calls for the creation of 22 million jobs but admits that would take either “140 new Boeing Companies or 90 new General Motors.”






What’s the likelihood of that happening any time soon, even with Mr. Hindery’s proposed reforms?









4 Million Small Businesses to the Rescue
However, there are about 4 million small businesses with 2 to 24 employees in the country.

If we stabilize the economy, start again making small business loans and take other actions to make small business more financially healthy, we could rather quickly add back half the jobs lost in the recession -- if each of these small businesses averaged adding only one new employee.







Throw in the hiring from the rest of the nation’s businesses with 100 or less employees and we could be well on our way to Mr. Hindery’s 22 million new jobs.

Small Business = The Big Reality
Finally, the real growth in the U.S. manufacturing sector is in the form of small businesses. Here in South Carolina we have over 5000 manufacturers. Eighty-four percent of these have less than 50 employees and 90% have less than 100 employees—hardly big manufacturers. But if Mr. Hindrey is looking for more Boeing and General Motors, this is where he will find them growing and providing the new jobs that he dismisses.