I've been meaning to write about this for a while, but never actually got around to it. On September 15 the Boston Business Journal
ran an article entitled Report: Mass. ignores small business segment
. As a small business owner, this obviously caught my attention.
According to the article 'small businesses are undercounted in Massachusetts and that is hurting them'. Apparently the state of Massachusetts, when compiling statewide employment data does not count sole-proprietorships
, of which, in 2004, there were over 424,000â€”17% of all jobs in Massachusetts.
What does this actually mean for sole proprietors such as myself? Well, it means that the state does not offer any economic incentives for the development of my business. There are no tax cuts, subsidies, or any other sort of aid that I can take advantage of as a sole proprietor. To be honest, I would generally consider this a good thing. Why should the government give me preferential treatment over your ordinary private citizen? Government subsidies are, in my opinion, a stagnating force serving largely to preserve inefficiencies in our economy and, in general, doing more harm than good. Tax cuts, which I approve of in general, would be better, I think, if applied to individuals rather than businesses. Politically, I just don't think there's any good reason to give me or other sole proprietors (or any business, for that matter) preferential treatment of any kind.
That, of course, is a purely ideological position. In truth, you probably wouldn't hear me complain too much about policies that resulted in me paying fewer taxes or getting free money in the name of 'economic stimulation'; as long as the current state of things is unfair, it may as well be unfair in my favor. And, again from an ideological standpoint and ignoring the fact that I fit into this category, I think that, if you are going to be favoring any businesses anyway, sole-proprietorships and other small businesses are where you want the aid to go as it will have a more direct effect on the individuals that make up the company.
Also, there is a lot to be said for encouraging the growth of small businesses. Small businesses are, in my opinion, an important part of any economy. In the event of massive economic upheaval (of which there are many sorts that could occur, I don't think there's much need to enumerate them), small business are much more agile and able to adapt to those changes. While a large business will be more likely to weather the storm and survive due to their own economic inertia, a small business will actually be able to change the way they work to suit the new situation thus providing a far more dynamic, resilient, and efficient economy. Some would argue that small businesses are also more risky, as, if they fail to adapt as advertised, they'll generally be forced to just go out of businesses as they lack the reserves to keep them going in a rough spot. That, I'd say, doesn't really indicate any sort of inferiority, however, as large businesses will usually go through rounds of layoffs while weathering a storm resulting, probably, in an equivalent number of lost jobs.
Given Massachusetts' current predicament of declining population as businesses and individuals flee the high cost of living and business, enacting policies to attract new business would go a long way to invigorating the economy and reverse the flow of the 'Mass Exodus'. And there can be little doubt that it would be best for the Massachusetts economy if business expansion in the state were the result of new Massachusetts-based companies springing up and keeping their earning here in Massachusetts rather than large, national companies opening offices and then dispersing their profits throughout the country. In other words, Massachusetts should be working to specifically encourage the starting of small and home businesses and sole proprietorships throughout the state. It's good for the citizens of Massachusetts, it's good for the people who want to do business here, it's good for the Massachusetts economy, and it's good for the state.
This issue is, of course, quite relevant given the ongoing gubernatorial race (which I'd really like to see other people start calling Mass Guber '06 too). Sadly, although all of the candidates mention the need to attract new people and businesses to the state, none of them say a thing, that I've been able to find, about small businesses specificallyâ€”although Patrick's proposed increase of the minimum wage would hurt small businesses, and Healey's proposed reduction in unemployment insurance costs would help them. This is another one of the reasons that I support Christy Mihos
. As the owner of a local, Massachusetts-based business himself, I trust him to keep local businesses in mind when shaping economic policy, and not sell out the interests of small businesses in favor of large national and multi-national corporations.