Now that corporate America is down and out and venture capital seems to be dormant, the free market critics have turned their focus to discrediting the impact small business in our economy.
The latest comes from the progressives at the Center for Economic and Policy Research. They cite biased statistics to claim that US small business is not what we think it is. They say the US has a low percentage of self-employed compared to the rest of the world. The problem is that due to differences in legal requirements and tax law countries count "self-employed" quite differently -- they are comparing apples to liver sausage. Then they say that we have a small base of employment in small business, but only look at our manufacturing companies under 20 employees, and not at the overall employment in small firms -- statistical cherry picking at its finest. Finally, they say that we are weak in small business technology firms, but again cite only selected statistics that support their attempt to conclude that America is not small business friendly.
And why do they argue all of this? It is because we don't have socialized healthcare, of course. From a news release they sent out this week:
"In the rest of the world, entrepreneurs who want to start a new business don't have to think twice about where they and their employees will get health insurance," said Schmitt. "In the United States, talented people thinking about starting a new business often have to choose between following their dream or going without health insurance."
First of all, their statistics are biased. In addition, survey after survey, study after study, show that tax rates, regulation and property rights are what predict overall entrepreneurial activity.
What I fear most is that this will become part of an attempt to discredit the overall importance of small business. After all, it is small business that now offers the only hope of escape from encroaching socialism and progressivism.
The latest comes from the progressives at the Center for Economic and Policy Research. They cite biased statistics to claim that US small business is not what we think it is. They say the US has a low percentage of self-employed compared to the rest of the world. The problem is that due to differences in legal requirements and tax law countries count "self-employed" quite differently -- they are comparing apples to liver sausage. Then they say that we have a small base of employment in small business, but only look at our manufacturing companies under 20 employees, and not at the overall employment in small firms -- statistical cherry picking at its finest. Finally, they say that we are weak in small business technology firms, but again cite only selected statistics that support their attempt to conclude that America is not small business friendly.
And why do they argue all of this? It is because we don't have socialized healthcare, of course. From a news release they sent out this week:
"In the rest of the world, entrepreneurs who want to start a new business don't have to think twice about where they and their employees will get health insurance," said Schmitt. "In the United States, talented people thinking about starting a new business often have to choose between following their dream or going without health insurance."
First of all, their statistics are biased. In addition, survey after survey, study after study, show that tax rates, regulation and property rights are what predict overall entrepreneurial activity.
What I fear most is that this will become part of an attempt to discredit the overall importance of small business. After all, it is small business that now offers the only hope of escape from encroaching socialism and progressivism.
Thanks for calling attention to our paper, but I'd urge you to read the full paper before making serious attacks such as "spreading untruths." (Here is the link: http://www.cepr.net/documents/publications/small-business-2009-08.pdf.)
Your main arguments are that we cherry-pick our data and that, in any event, the underlying data are biased.
On cherry-picking you tell your readers that: we "...only look at our manufacturing companies under 20 employees, and not at the overall employment in small firms -- statistical cherry picking at its finest." If you read the paper, you will see that we actually report data for every industry group for which the OECD reports internationally comparable data: manufacturing; computer-related services; research and development; hotels; restaurants, bars, and canteens; real estate activities; and renting of machinery and equipment. No internationally comparable data exist for small-business employment in the economy as a whole, but these data cover a broad swath of industries in manufacturing and services and high- and low-tech sectors, and in every case, the United States is at or near the bottom in terms of employment in small firms. As the paper shows, these results hold no matter where we set the bar for a small business. For example, in manufacturing, the United States is third from the bottom if we make the cutoff 20 employees, and absolute last if we make the cutoff 500. If you think we've cherry-picked, please point to some actual data for sectors that we missed that show a different story, let alone a story different enough to reverse our conclusions.
On the issue of bias, all of our data are taken from the Organization for Economic Cooperation and Development, which goes to great efforts to put data on an internationally comparable basis. If you read the report, you will see that if there is any bias in the underlying statistics it works in the direction of *inflating* the size of the US small business sector. In the US data (also true in Australia and Japan), the data refer to establishment size, while in the other countries in the international comparisons, the data refer to firm size. So, in the United States, a restaurant with 18 employees, say, would count as a small business, even if it were owned by corporate headquarters, while in the almost all of the other countries, a restaurant with only 18 employees would count as a small business only if it weren't owned by a larger entity.
You can certainly disagree with our suggestion that one possible explanation for these facts is that they all have systems of universal health care. (And there are certainly many factors at play here. In France, for example, zoning laws have blocked the expansion of superstores, which would certainly have wiped out a lot of small businesses.) But, I think you do your readers a disservice to argue against an overwhelming body of facts about the relative size of the small-business sector. Anyone interested in promoting and sustaining small businesses should want to know why it is that the US small business sector is smaller than it is in Europe and elsewhere.
Test
I did review your paper. One of my main concerns is that what you chose to include in your press releases were specific nuggets that fit your agenda. The average citizen will not read your paper -- only what is reported about it in the media. The media will base their stories on what is in your press release. And those stories will often be watered down even further.
I also have question about the comparability of the statistics you compare and your methodology. The statistics used are measured in very different ways around the world -- as I pointed out about the self-employment data.
But what disturbed me most is that you used these statistics to make conclusions of causality that have no basis in the data you examined. Nothing in your data even suggests that absence of socialized healthcare is a barrier to entrepreneurial activity.
The data as you present it is stark contrast to studies based on data from the SBA, GEC and others. And it fails to address critical factors such as the relative start-up rates in the economies, growth rates in these ventures, job creation, etc.
In addition to reading your study, I would urge my readers to also read your websites so they can understand your agenda.
So, may I ask you where is the best place to get well? My parents have been working in the health care sector in Sweden, so I could give you plenty of example of how socialized medicine is bad for your health.
I hope that organizations like Americans for Free Choice in Medicine (AFCM.org) and Freedom and Individual Rights in Medicine (WeStandFirm.org) will continue to spread better ideas so I could return to the United States of America as a free individual!
Well, it's easy to dismiss this paper. The reason? Their news release fails to make the proper statement due to lack of something (preparation, intelligence, etc). And if they can't get a news release right, what are the chances they got the actual research right? If they wanted to link a low self-employment percentage with lack of universal health care, the last statement of the release ("In the United States, talented people thinking about starting a new business often have to choose between following their dream or going without health insurance.") should not read "or going without health insurance." It should read "or keeping their health insurance." That assumes of course that by "following their dream" they mean "starting their own business."
Small Business owners are largely forgotten. Thats why I only focus on them. I have experience several members of my family file bankruptcy due to small business failures. I also I suffered through 2 destroyed businesses due to failure however, in my failings I have learned some of the secrets to success. (Who can say they know it all?)
www.onlineuniversalwork.com