ECON: Small Business doing fine while Big Business suffers

From: Harvey Newstrom (mail@HarveyNewstrom.com)
Date: Thu Jul 25 2002 - 08:41:15 MDT


 From
<http://www.nytimes.com/2002/07/25/opinion/25HOCH.html?todaysheadlines>

American Capitalism's Other Side
By FRED P. HOCHBERG
  ndy Grove, a founder of Intel, summed up the mood of recent weeks when
he said he is "embarrassed and ashamed" to be a corporate executive in
America today.

Like so many other great successes, Intel was, in its early years,
nurtured by an economic system that encourages innovation and
entrepreneurship — and helped by institutions like the Small Business
Administration. In return, the company grew into an example of American
ingenuity.

Historically, America's small- business owners have always focused on
fundamentals: they concentrate on creating something of value,
generating jobs and profits in the process. At the heart of the current
corporate quagmire is a departure from these principles.

Driven by the perceived imperatives of the stock market, many
corporations have skewed their priorities. Meeting quarterly earnings
projections has become more important for them than building long-term
shareholder value. The result can be seen in the implosion of giant
corporations, thousands of layoffs and evaporating retirement savings.
This spectacle has cast a pall not just over corporate America but over
the American brand of free-market capitalism.

Despite the pessimism here and abroad, most American corporations are
aboveboard in running their businesses and recording their bottom lines.

But more important, it's just not true that as big corporations go, so
goes the American economy.

During the 1990's, more than 80 percent of the net gain in new jobs was
not from corporate giants, but from small companies involved in a range
of businesses (far broader than the dot-coms). By the end of the decade,
nearly half the work force was employed in small businesses. Their
efforts powered the record economic growth of the 1990's.

Government and business leaders from around the world come to our
country to learn how we nurture and sustain small entrepreneurs. But we
are not doing nearly enough to show the world this side of American
capitalism. The Bush administration removed the Small Business
Administration from the cabinet and proposed cutting the agency's
funding by over 20 percent. Worse, it aims to reduce the agency's
lending capacity by 50 percent. This year, there is $9.4 billion
available for small-business loans guaranteed by the agency. For next
year, the administration is proposing less than $5 billion. At a
minimum, the administration should restore or even increase the agency's
lending capacity, especially since access to capital may now be sharply
curtailed.

At a time of shaken confidence in American business, the administration
should also work to put the small-business model at the heart of our
global economic message. It should invest more resources to encourage
the growth of small businesses in the developing world through
microlending institutions. Microloans give people the opportunity to
improve their lives and become stakeholders in their societies.
Microlending nurtures the fundamental values of democracy and helps them
take root.

Businesses based on jobs and profit, not the gambles of the stock
market, are the real foundation of American capitalism. I have never
heard small-business owners say they were embarrassed by what they do;
they are rightfully proud of the enterprises they have built.

(Fred P. Hochberg was deputy administrator and acting administrator of
the Small Business Administration from 1998 to 2001.)

--
Harvey Newstrom, CISSP		<www.HarveyNewstrom.com>
Principal Security Consultant	<www.Newstaff.com>


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