On April 22, 2013, Charles Hugh Smith writes on TwoMinds.com:
Small business is the incubator of employment. As it declines, so too do opportunities for first jobs, second chances and economic independence.
Self-employment and small business are two sides of a single economic coin: financial independence. The Bureau of Labor Statistics (BLS) counts two types of self-employed, the unincorporated and the incorporated. The unincorporated may have employees, but typically do not, i.e. they are sole proprietors. The incorporated have employees, starting with the owner, as the BLS counts the incorporated self-employed as employees of their own corporation.
I know that’s confusing, but it’s important to separate the sole proprietors from those “self-employed” incorporated businesses that have employees: law firms, doctors’ offices, accountants, etc.
When we speak of “small business,” we’re referring in large part to the incorporated self-employed: people who establish corporations as the legal structure for their enterprise.
Nothing is simple when it comes to parsing all the data, of course, but the BLS has a paper that explains the basic categories: Self-employment in the United States (Bureau of Labor Statistics).
The BLS attributes the decline in unincorporated self-employment from 1950 to 1970 to the consolidation of agriculture. As agriculture became more mechanized, small farms were no longer viable and farming required less labor. As a result, many self-employed farmers and laborers became employees or moved to other sectors.
Only when the economy experiences positive, significant growth will there be opportunities for self-employment and small business, which largely consists of “service” businesses.
At the core of understanding America’s economic disintegration and seemingly intractable economic problems is the need to learn a new way of thinking that explains why the operation of our modern industrial economy is simply not working. Although tectonic shifts and advances in the technologies of production promise the increasing abundance of exponential growth in the economy’s capacity to produce products and services with much less human effort, there is widespread poverty and a disintegration of middle class status. Even when the economy has experienced some degree of growth, too many people remain poor or are excluded from the resulting limited economic abundance. The notion that the economic benefits flowing to a wealthy class will “trickle-down” is a non-sensible theory and only results in “trickle” menial, low-pay jobs, private charity, and public taxpayer-supported welfare, in plain view and disguised.
What has and continues to escape the focus of conventional economists, and the politics of progressives, centralists and conservatives, is that the wealthy are rich because they own productive capital––non-human wealth-creating assets used to produce products and services. The reality is that in most economic tasks and in the overall economy, productive capital (not human labor) is independently doing evermore of the work that results in the products and services produced for consumption. It is productive capital’s increasing productiveness and evolution, rather than human effort (productivity conventionally considered) that is the productive means most responsible for economic growth. Effectively, technological innovation and invention limits new higher productivity jobs to relatively fewer workers, leaving most other people willing and able to work with lower paying job opportunities or no jobs at all. This increasing majority is finding it more and more difficult to afford the products and services that are increasingly produced by productive capital.
http://www.oftwominds.com/blogapr13/small-biz-decline4-13.html
