Who's really looking out for small biz?

Parsing the GOP's claim to represent mom and pop entrepreneurs

Published July 27, 2012 3:32PM (EDT)

President Obama signing the Jumpstart Our Business Startups (JOBS) Act in April. (Credit: Reuters/Jason Reed)
President Obama signing the Jumpstart Our Business Startups (JOBS) Act in April. (Credit: Reuters/Jason Reed)

This originally appeared on Jared Bernstein's blog, On the Economy.

Like most Americans, I’m all for small businesses.  Those plucky entrepreneurs, staking their own claims, pursuing an idea or even a dream … they have a solid place in the American firmament.

Then again, like most economists, I’m wary of crafting policy based on firm size.  As I’ve stressed in these parts, I’m particularly suspicious of claims that small businesses are disproportionate job creators. The best research suggests that new firms that survive — and less than half live past five — can be big job creators, but old, small businesses tend to stay that way.

Still, based on their competitive disadvantages to large firms — credit access, capital cushions, entrée into foreign markets, tighter operating margins — our small businesses often need some policy help.

And that’s why I was happy to see this profile today of John Arensmeyer, the founder of the Small Business Majority, an important alternative to the NFIB.  Here’s how Arensemeyer describes the SBM's raison d’être :

I felt that on many issues, the business organizations took very ideological, sort of blanket positions. For instance, all government is bad, or all government regulation is bad. That’s not the way most small business owners think. Most small business owners welcome government involvement sometimes, recognize a role for government sometimes, and sometimes they think government has gone too far…Whether the issue was taxes or regulations, just to blanketly say all taxes are bad or all regulations are bad, I didn’t think that was an appropriate way to look at the world. I think it has hindered the ability of those organizations to really work constructively with policymakers on both sides of the aisle to forge solutions.

Healthcare costs are a huge issue for small businesses that cover their workers, and while the NFIB was a name plaintiff in the case against the Affordable Care Act, the SBM has been highly supportive, recognizing the benefits to small firms of the broad pooling mechanisms in the law.

They also identify the importance of economically healthy customers.  No business embraces taxes and regulations, but if you listen to what many small business folks are actually saying, many of their concerns right now have a lot more to do with foot traffic by consumers than taxes or the EPA.

On the other hand, if you listen to the NFIB, you don’t hear the concerns of small businesses, you hear the Koch brothers’ agenda.  So I’m glad to see another player on the scene, one who’s actually looking out for the little guy/gal.

By Jared Bernstein

Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow. From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden. Follow his work via Twitter at @econjared and @centeronbudget.

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