How the Stimulus Bill Won’t Stimulate Job Growth, But What Can Boldly Be Done Next
As important as the new American Recovery and Reinvestment Act (ARRA) of 2009 is to helping us get back to some sense of “normalcy” as a country, the sector that regularly produces between 60% and 80% of all new jobs in America will only marginally benefit. I’m talking about America’s small business owners and entrepreneurs. They’re the real losers from the recently passed stimulus bill, and it’s unfortunate for our economy. Sure, there were some tweaks to the existing SBA loan programs (which I’ve been advocating for nearly 7 years), but these changes will only produce slight improvements to the small business lending arena to get valuable capital flowing again. I view the ARRA as Phase I – essentially a finger in the dyke of economic decline and stagnation – but much more is needed.
We need radical new legislation to produce tomorrow’s new job growth markets – the markets that will enable us to grow our way out of this recession. Phase I was about “halting the bloodletting;” Phase II needs to be about healing the patient for future growth and prosperity. It’s not too early to be discussing this, as taking these steps now will enable the recovery to begin much quicker and establish surer footing for the new economy we’ll have on the other side of this cycle.
We need a “bailout” of sorts for America’s primary job creating sector: small businesses. Our politicians have done plenty for their top campaign donors… I mean Big Businesses, but they’ve done shockingly little for small business. Why no one seems to suggest that we stimulate where 60% to 80% of new jobs are created is beyond me. We should go where our strengths are. It’s time for those in Washington to recognize the shift in society that is presently underway – – from Big Business to Small Business. This shift has been slowly occurring for years, with diminishing pension plans and job security being the most noticeable, but the Internet and the recent collapse of confidence in “Wall Street-related” investing has accelerated this process.
No longer do wise parents tell their children to “get an education so you can go work for a big company with good benefits for many years and then retire.” That advice is passé these days. Wise parents today teach their children to become educated, but use their education to go into business for themselves – to create and control their destiny, not become office or factory slaves hoping for a gold watch someday. With today’s technologies and opportunities all around, there has never been a better time to start a business… yet fear is gripping many Americans like never before who would otherwise take the entrepreneurial leap during recessions like ours.
As a financier of small businesses and a serial entrepreneur myself, I regularly hear from people determined to do just this. They’re tired of trusting some large, faceless, company to grow their personal savings. Many would rather strike out on their own and bet on themselves or their friend’s business. Yet, our leaders fail to understand that economies always evolve and smaller, innovative companies always render larger, older companies obsolete. It’s a fact of capitalism those in the Washington Beltway ought to learn fast. The face of America’s investor class is changing. American business will look very different as we come out of this recession. Eventually, more and more people will use self-directed funds (what’s left of them after the losses of 2008) to start businesses, buy franchises, and fund others’ businesses. This is an extremely positive development for the future of America, as more people seek self-reliance. This transfer of capital from Wall Street to Main Street needs to be encouraged, not resisted.
So what can we do NOW to stimulate job growth?
I will detail my seven solutions, in what I call Phase II – – a “Small Business Growth Act of 2009”, that would jolt America’s small business community into creating even more jobs so desperately needed right now, in my next blog post . . . So stay tuned!