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Home Publications Blogs Beat the Press Small Business: The Source of the Vast Majority of Job Losses

Small Business: The Source of the Vast Majority of Job Losses

Thursday, 22 July 2010 04:34

Politicians routinely praise small business as the source of all good. In reality, small businesses, just like large businesses, are a mixed bag. While they can be a source of economic dynamism and good jobs, many small business owners rip off their workers and their customers, cheat on their taxes, and contribute little of value to the economy before they fail.

It is the job of the media to report on small business with clear eyes, not just repeat happy-talk nonsense from politicians. Therefore, it was disappointing to read a NYT article on a package of special loans and tax breaks for small businesses that began:

"Perhaps the last best hope of Democrats to pass legislation aimed at creating jobs before the November elections seemed to be crumbling in the Senate on Wednesday as Republicans signaled that they would block a bill to expand government lending programs and grant an array of tax breaks to small businesses."

Why would the article assume that the bill is "aimed at creating jobs?" Yes, this is what the politicians said about the bill. But --- hold onto your hats boys and girls -- politicians sometimes say things that are not true.

An alternative explanation is that politicians want to give money to small businesses, a constituency that can be very influential in many upcoming congressional races. Many of the features of this package, such as tax breaks that apply to past actions, look more like measures to give businesses money than to create jobs.

Rather than attributing motives, it would be more appropriate to simply report the bill's contents and what various parties say about it.

Comments (4)Add Comment
written by izzatzo, July 22, 2010 6:53
Yes, small is so beautiful, as long understood by hard core libertarians who know that society, government, businesses and institutions don't exist, because they're mere summations of individuals with positive and negative freedoms. That's also why government cannot produce anything and taxing corporations is double taxation.

Then the libertarians jump into their tax discounted Hummers sitting on tax subsidized farms, loaded with negative externality guns, drive on government provided roads using subsidized gas while consuming government cleaned air and water, on their way to a Teabagger meeting to profess the virtues of how much their one-employee small business adds true private value to the economy and is struggling valiantly to survive the onslaught of socialism.

Meanwhile, the real small people, labor and businesses trying to break free from the circular stranglehold of big corporations and the ultra rich continue to get the shaft, insulted as freeloading freeriding bloodsuckers who dare challenge the nanny state that keeps the rich richer and the poor poorer.
written by Some Smart Alec, July 22, 2010 1:28
Yeah, small businesses don't provide half as many jobs as unions or Harvard economists. What losers.
written by Queen of Sheba, July 22, 2010 3:48
As a small business owner I appreciate tax breaks as much as anyone else. And I appreciate low-cost loans when I need to borrow money. But calling this package of stale ideas a "jobs bill" is a cruel joke on everyone.

If this is the best the government can do, they should just give it up and hold a press conference leveling with the American people: "We are not willing to do anything to put people back to work. So enjoy your time off. We'll be here in Washington arguing about the number of angels that can dance on the head of a pin and playing with ourselves."
small leads to large
written by Melissa, July 23, 2010 7:05
Not disagreeing with the criticism of calling this a jobs bill, at least with the implication of short term stimulus-type jobs, but don't all large businesses start as small businesses? So isn't supporting the viability of, and encouraging new, small businesses a reasonable route to lead to the formation of more large employers in the long run, and thus to more jobs in the long run?

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.