Small Business, Big Fable

(Courtesy of The Washington Post)

By Steven Pearlstein
Wednesday, July 8, 2009


One of the most enduring lies in American politics is the myth of small-business job creation.

You probably know it by heart: Small businesses create 60, 70, even 80 percent of all the new jobs in the United States.

Back in the 1980s, I was a senior editor at Inc. magazine, where I worked on some of the articles in which some of the seeds of this myth were planted. Up to that point, there was a widespread tendency to conflate the success of the economy with the fortunes of big business, so it was rather useful to have some data highlighting the importance of small firms.

By now, however, that analysis of net job creation has been repeated and embellished and oversimplified by so many lobbyists and politicians that it is only a matter of time before the magic number swells to 100 percent of job creation and small businesses will be demanding to be exempted from all taxes, all regulation and the Ten Commandments.

This is not the time or place for a long statistical explanation. Suffice it to say that, in terms of new job creation, the data show that most of it happens in a small number of very fast-growing companies that are no longer what most of us would consider small. There are lots of reasons for the success of these fast-growing firms, among them the ingenuity and hard work of their founders, the availability of capital and a culture that celebrates risk-taking.

But the dirty little secret is that a lot of small-business job growth has also been driven by the decision of big businesses to outsource many tasks that they used to do in-house. In an economic sense, jobs haven't been so much "destroyed" and "created" as they have been shifted from one company to another.

All of which brings us to the issue du jour: health-care reform.

From the beginning, President Obama and congressional leaders have said they want to pursue a reform agenda that builds on the existing employer-based health insurance system. One glaring problem with that employer-based system, however, is that every year more employers -- mostly small and mid-size businesses -- offer no health insurance. The result is that about 35 million American workers and their family members have no health insurance at all.

To fix that problem, most health reform proposals envision a new government-sponsored insurance "exchange" in each region through which all insurers would offer a basic health policy at the same price to all employers, regardless of size, and all workers, regardless of preexisting health conditions. For the exchanges to succeed in lowering the cost of insurance, all employers must be required to offer coverage and all employees must be required to purchase it.

The small-business lobby, however, remains just as stubbornly opposed to an "employer mandate" as it was 15 years ago when President Bill Clinton proposed it. Requiring small firms to offer health insurance, they warn, will drive millions of them out of business while sapping from all the others the profits they need to invest and grow. And since small business, as we all know, accounts for virtually all job creation, an employer mandate will stop the U.S. economy dead in its tracks.

This argument, of course, is 100 percent Grade A hooey, beginning with the myth of small-business job creation.

After all, one reason small businesses "created" all those jobs in the first place is that they enabled big companies with generous health plans to outsource work to small companies that had lower cost structures because they offered no insurance at all. If simply requiring those small businesses to offer health insurance would wipe out that cost advantage and drive them out of business, then maybe those companies weren't the great engines of innovation and efficiency that they always claimed they were.

Most likely, those small businesses today are no longer competing with big companies, but with other small firms with similar cost structures. Requiring all of them to offer health insurance wouldn't put any firm at a competitive disadvantage -- it would simply raise costs for all of them, forcing them to pass those costs on to someone else.

In the short run, that someone else would be customers. Business owners are always quick to claim that they can't raise prices because of competitive pressures, but if that were true, prices would never rise.

If a price increase is steep enough, some customers will probably decide to buy less of whatever the small businesses are selling, which could result in some job loss. But in the case of the cost of health insurance, a typical small company would be passing on a total cost increase of a couple of percentage points -- hardly the stuff of economic calamity.

Economists agree that in the long run, however, the increased cost for employee health benefits would be passed on to the employees themselves in the form of lower wages and salaries. That's what happened economy-wide in recent decades, as average wages stagnated while the cost of health insurance skyrocketed. If the same holds true for small businesses, then requiring them to provide health insurance should result in no job loss at all.

In the coming weeks, we'll find out if political mythology will continue to trump sound economic logic. After all, small businesses would be the big winners from those new health insurance exchanges, and Democrats in both the House and Senate have agreed to sweeten the proposal even further by offering tax breaks and exempting the smallest firms from any health insurance mandate. Still, most of the small-business lobby remains reluctant to sign on.

It gets you to thinking: Maybe there's a reason why these are small businesses.

ADAM SMITH ~ Baptised June 16, 1723 ~ July 17, 1790

Adam Smith (baptised 16 June 1723 – 17 July 1790 [OS: 5 June 1723 – 17 July 1790]) was a Scottish moral philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations. The latter, usually abbreviated as The Wealth of Nations, is considered his magnum opus and the first modern work of economics. Adam Smith is widely cited as the father of modern economics.

Smith studied moral philosophy at the University of Glasgow and Oxford University. After graduating he delivered a successful series of public lectures at Edinburgh, leading him to collaborate with David Hume during the Scottish Enlightenment. Smith obtained a professorship at Glasgow teaching moral philosophy, and during this time wrote and published The Theory of Moral Sentiments. In his later life he took a tutoring position which allowed him to travel throughout Europe where he met other intellectual leaders of his day. Smith returned home and spent the next ten years writing The Wealth of Nations (mainly from his lecture notes) which was published in 1776. He died in 1790.

Image & text courtesy Wikipedia.com

ORLANDO di LASSO ~ 1532 ~ June 14, 1594

Orlande de Lassus (also Orlandus Lassus, Orlando di Lasso, Roland de Lassus, or Roland Delattre) (1532 (possibly 1530) – 14 June 1594) was a Franco-Flemish composer of late Renaissance music. Along with Palestrina (of the Roman School), he is today considered to be the chief representative of the mature polyphonic style of the Franco-Flemish School, and he was the most famous and influential musician in Europe at the end of the 16th century.

Image & text courtesy Wikipedia.com

"CASEY at the BAT" ~ 1st published June 3, 1888

Image: simonandschuster.net/assets

"Casey at the Bat", subtitled "A Ballad of the Republic Sung in the Year 1888", is a baseball poem written in 1888 by Ernest Thayer. First published in the San Francisco Examiner on June 3, 1888, it was later popularized by DeWolf Hopper in many vaudeville performances.

In the poem, a baseball team from the fictional town of Mudville (implied to be the home team) is losing by two runs with two outs in their last at bats, but they think they can win "if only" they could somehow get "mighty Casey" up to bat. Two weak hitters manage to get on base, and Casey comes to bat with the tying run in scoring position. The beloved Casey, Mudville's star player, is so confident in his abilities that he doesn't swing at the first two pitches, both strikes. On the last pitch, the overconfident Casey strikes out, ending the game and sending the crowd home unhappy.

The text is filled with references to baseball as it was in 1888, which in many ways is not far removed from today's version. As a work, the poem encapsulates much of the appeal of baseball, including the involvement of the crowd. It also has a fair amount of baseball jargon that can pose challenges for translators.

The poem was originally published anonymously (under the pen name "Phin"). Thayer was so embarrassed by what he considered to be doggerel that he kept his identity secret for years. It was only after others claimed to have written the poem that he finally came forth, although he remained embarrassed by its success in the face of what he considered to be its low merit.

This is the complete poem as it originally appeared in the San Francisco Examiner.

The outlook wasn't brilliant for the Mudville Nine that day;
The score stood four to two, with but one inning more to play,
And then when Cooney died at first, and Barrows did the same,
A sickly silence fell upon the patrons of the game.
A straggling few got up to go in deep despair. The rest
Clung to that hope which springs eternal in the human breast;
They thought, if only Casey could get but a whack at that -
We'd put up even money, now, with Casey at the bat.
But Flynn preceded Casey, as did also Jimmy Blake,
And the former was a lulu and the latter was a cake;
So upon that stricken multitude grim melancholy sat,
For there seemed but little chance of Casey's getting to the bat.
But Flynn let drive a single, to the wonderment of all,
And Blake, the much despis-ed, tore the cover off the ball;
And when the dust had lifted, and the men saw what had occurred,
There was Jimmy safe at second and Flynn a-hugging third.
Then from 5,000 throats and more there rose a lusty yell;
It rumbled through the valley, it rattled in the dell;
It knocked upon the mountain and recoiled upon the flat,
For Casey, mighty Casey, was advancing to the bat.
There was ease in Casey's manner as he stepped into his place;
There was pride in Casey's bearing and a smile on Casey's face.
And when, responding to the cheers, he lightly doffed his hat,
No stranger in the crowd could doubt 'twas Casey at the bat.
Ten thousand eyes were on him as he rubbed his hands with dirt;
Five thousand tongues applauded when he wiped them on his shirt.
Then while the writhing pitcher ground the ball into his hip,
Defiance gleamed in Casey's eye, a sneer curled Casey's lip.
And now the leather-covered sphere came hurtling through the air,
And Casey stood a-watching it in haughty grandeur there.
Close by the sturdy batsman the ball unheeded sped-
"That ain't my style," said Casey. "Strike one," the umpire said.
From the benches, black with people, there went up a muffled roar,
Like the beating of the storm-waves on a stern and distant shore.
"Kill him! Kill the umpire!" shouted someone on the stand;
And it's likely they'd a-killed him had not Casey raised his hand.
With a smile of Christian charity great Casey's visage shown;
He stilled the rising tumult; he bade the game go on;
He signaled to the pitcher, and once more the spheroid flew;
But Casey still ignored it, and the umpire said, "Strike two."
"Fraud!" cried the maddened thousands, and echo answered fraud;
But one scornful look from Casey and the audience was awed.
They saw his face grow stern and cold, they saw his muscles strain,
And they knew that Casey wouldn't let that ball go by again.
The sneer is gone from Casey's lip, his teeth are clenched in hate;
He pounds with cruel violence his bat upon the plate.
And now the pitcher holds the ball, and now he lets it go,
And now the air is shattered by the force of Casey's blow.
Oh, somewhere in this favored land the sun is shining bright;
The band is playing somewhere, and somewhere hearts are light,
And somewhere men are laughing, and somewhere children shout;
But there is no joy in Mudville— mighty Casey has struck out.

text courtesy. wikipedia.com

My Bohemian friend Noah Griffin delivers a powerful interpretation of "Stacy at the Bat." And this is only one of dozens of poems in his repertoire.

Indian Citizenship Act ~ 1924

photo: nebraskastudies.org/0700/media/0701_014601.jpg

On June 2, 1924, Congress enacted the Indian Citizenship Act, which granted citizenship to all Native Americans born in the U.S. The right to vote, however, was governed by state law; until 1957, some states barred Native Americans from voting. In a WPA interview from the 1930s, Henry Mitchell describes the attitude toward Native Americans in Maine, one of the last states to comply with the Indian Citizenship Act:

One of the Indians went over to Old Town once to see some official in the city hall about voting. I don't know just what position that official had over there, but he said to the Indian, 'We don't want you people over here. You have your own elections over on the island, and if you want to vote, go over there.'

"The Life of Henry Mitchell"Old Town, Maine,Robert Grady, interviewer,circa 1938-1939.American Life Histories, 1936-1940

Wikipedia.com

Ramesses II becomes Pharaoh of Egypt ~ May 31, 1279 B.C.E.

Image:Abu_Simbel.comeseeegypt.com

Ramesses II (also known as Ramesses the Great and alternatively transcribed as Ramses and Rameses *Riʕmīsisu; also known as Ozymandias in the Greek sources, from a transliteration into Greek of a part of Ramesses' throne name, User-maat-re Setep-en-re) was the third Egyptian pharaoh of the Nineteenth dynasty. He is often regarded as Egypt's greatest, most celebrated, and most powerful pharaoh. His successors and later Egyptians called him the "Great Ancestor".

He was born around 1303 BC and at age fourteen, Ramesses was appointed Prince Regent by his father Seti I. He is believed to have taken the throne in his early 20s and to have ruled Egypt from 1279 BC to 1213 BC for a total of 66 years and 2 months, according to Manetho. He was once said to have lived to be 99 years old, but it is more likely that he died in his 90th or 91st year. If he became Pharaoh in 1279 BC as most Egyptologists today believe, he would have assumed his throne on May 31, 1279 BC, based on his known accession date of III Sheu day 27. Ramesses II celebrated an unprecedented 14 sed festivals during his reign—more than any other pharaoh. On his death, he was buried in a tomb in the Valley of the Kings; his body was later moved to a royal cache where it was discovered in 1881, and is now on display in the Cairo Museum.

Ramesses II led several expeditions north into the lands east of the Mediterranean (the location of the modern Israel, Lebanon and Syria). He also led expeditions to the south, into Nubia, commemorated in inscriptions at Beit el-Wali and Gerf Hussein.

The early part of his reign was focused on building cities, temples and monuments. He established the city of Pi-Ramesses in the Nile Delta as his new capital and main base for his campaigns in Syria. This city was built on the remains of the city of Avaris, the capital of the Hyksos when they took over, and was the location of the main Temple of Set.

Text:wikipedia.com

Founding of St. Petersburg ~ May 27, 1703

Photo of Winter Palace courtesy Robert Breuer: wikipedia.com