Tamny Admonition: Keep your class warrior hands off small business!

John Tamny article, Oct 6, 2013, “Sorry Class Warriors, Small Businesses Are Not The Backbone Of The U.S. Economy.”

Key Points:

Taking nothing away from small businesses, in most instances they’re merely an effect of the big businesses around which they cluster.

As economist Enrico Moretti pointed out in his masterful 2012 book, The New Geography of Jobs, big businesses are the principal drivers of small business job creation.

Considering Facebook, Moretti notes that its economic impact can’t be limited to its 1,500+ employees; instead we must consider the 53,000 jobs created for Facebook apps, not to mention “at least 130,000 more jobs in related business services.”

It’s also worth remembering the essential comment from warren Brookes about how “We’re blessed by the genius of the relatively few.”  Brookes’s point was that it’s an exceedingly rare kind of person…Bezos, Gates, Jobs, Fred Smith…that moves the economy forward with commercial innovations that change our lives and that often employ us. These unique individuals, people economist Reuven Brenner refers to as the “vital few,”  don’t profoundly transform commerce for being small or small business owners; rather their commercial achievements that make the U.S. a magnet for growth capital are an effect of them overseeing large businesses.

Small businesses are, as opposed to the locomotive that powers us forward, the result of the big businesses around which they cluster.  Let’s celebrate the entrepreneurialism that has led to their creation, but let’s also recognize and be reverential toward the often demonized big businesses whose success makes them possible.

 

 

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