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The Decline Of Small Business And The Middle Class

Tyler Durden's picture




 

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The only way to not just survive but thrive as an entrepreneurial enterprise is to destroy fixed costs and labor overhead.

It is not coincidental that the middle class and small business are both in decline. Entrepreneurial enterprise and small business have long been stepping stones to middle class incomes and generational wealth, i.e. wealth that is passed down to future generations rather than consumed. As the headwinds to entrepreneurial enterprise and small business rise, the pathway to middle class prosperity narrows.

The Washington Post published a study that found U.S. businesses are being destroyed faster than they’re being created. While not exactly a surprise, it was sobering evidence that small enterprise is in structural decline:

The decline of small business also hurts employment. Successful small businesses expand and hire employees. As small businesses close, jobs vanish en masse.

I have addressed this systemic decline many times, for example: The Decline of Self-Employment and Small Business (April 22, 2013)
Here's Why Small Business Isn't Hiring, and Won't be Hiring (July 11, 2011)

What are the headwinds to entrepreneurial enterprise and small business? Here are a few key dynamics:

1. Barriers erected by cartels and the government. Cartels prosper by eliminating competition, and the easiest, cheapest way to restrict competition is to influence government to create regulatory barriers that raise the cost to levels no small business can afford. There are dozens of examples of regulations that do little to "protect the public" (the usual rationalization) whose primary intent and effect is to suppress competition.

Sickcare and higher education, to take two egregious examples, are protected from real competition: there is little real transparency in pricing and little accountability for the efficacy of the product (diplomas, wellness).

2. Overcapacity. Supply exceeds demand in almost every nook and cranny of the global economy. There aren't many high-value opportunities to pursue because every field is already crowded or restricted.

The market ultimately sets the value of any output. You can ask $30 for a lunch plate but the market will determine the value. If your cost is $20 per plate and the market value is $15, you will lose money and go out of business.

3. High cost structure. Many people are calling for small businesses to pay their employees a living wage. I understand the emotional source of this demand: a desire to close the income gap and raise the standard of living of the working poor. But since the market sets the value of any enterprise's output (good or services), and the business has fixed costs (rent, utilities, business licence fees, taxes, inventory, back-office overhead such as accounting, etc.), a business can only pay wages and labor overhead out of gross profit--what's left after fixed costs are deducted from revenue.

Fixed costs and labor costs are both skyrocketing. Commercial landlords have inflated expectations of rent, thanks to the Fed-induced real estate bubble: since they overpaid for the building, they need to charge high rents to cover their mortgage payments and property taxes.

As I have explained in previous entries in this series on the middle class, the costs of labor overhead--healthcare insurance, pensions, payroll taxes, worker compensation, etc.--are rising. That leaves less available for wages.

Local governments are responding to their own soaring healthcare and pension costs by raising junk fees and taxes on small business: in many areas, a new small business faces a blizzard of fees for licenses, permits, etc.

The fundamental context of our economy is not conducive to small business or conventional employment: the cost of human labor keeps rising while technology that replaces human labor gets cheaper; fixed costs keep rising while overcapacity and anti-competitive barriers reduce high-value opportunities.
Any enterprise exposed to free-market forces must create value. If businesses can only create low value good and services, i.e. goods and services with thin margins, they can only pay low wages--not just to employees, but to the owners/entrepreneurs.

The only way to not just survive but thrive as an entrepreneurial enterprise is to destroy fixed costs and labor overhead. The food services enterprises that will thrive are those that share the expensive fixed costs of a kitchen. The enterprises that thrive will not own vehicles, they will share vehicles. The enterprises that thrive will not have employees, they will draw upon self-employed people who organize to complete a specific project/task and share the revenue.

The way to destroy fixed costs and labor overhead is to pay no business rent, own no vehicles, have no employees, owe no debt, own your own tools/means of production and nurture human and social capital. This model for small enterprise is overturning all the skimming cartels and bureaucracies: commercial real estate, local government fees and property taxes, etc. etc.

The future of middle class prosperity is entrepreneurial enterprise and joining the class of Mobile Creatives who minimize fixed costs and overhead and maximize productive cross-fertilization of skills, human and social capital and debt-free ownership (or shared access to) the means of production.

I cover all of this in my new book Get a Job, Build a Real Career and Defy a Bewildering Economy, which is in essence a how-to guide on becoming a Mobile Creative as a means of securing middle class prosperity in the emerging economy.

 

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Fri, 05/09/2014 - 10:47 | 4743289 Dr. Engali
Dr. Engali's picture

That last chart should have took the blue pill.

 

Edit: Small businesses are being destroyed faster than they are being created? I call bullshit. The birth/death model says we created 234,000 small businesses this past month alone. And if it's good enough for .gov it's good enough for me.

Fri, 05/09/2014 - 10:52 | 4743330 lordylord
lordylord's picture

The only person to blame is the American consumer.  The Mom-and-Pops go out of business because you want to save 50 cents on screw drivers at Walmart.  Stop asking government to fix your problems (talking to you libtards, occupy protesters, etc.) when you can fix them yourselves.

Fri, 05/09/2014 - 10:56 | 4743345 Al Huxley
Al Huxley's picture

I think a lot of people aren't asking the government to fix the problems, just to get the fuck off their backs, and stop spying on them, regulating and taxing them to death.

Fri, 05/09/2014 - 11:02 | 4743370 TBT or not TBT
TBT or not TBT's picture

Jeremiah Wright preached to the Obamas that the pursuit of "middleclassness" is wrong. Apparently the pursuit of aristocracy is right, however.

Fri, 05/09/2014 - 11:33 | 4743517 drendebe10
drendebe10's picture

Standing ovation for a job well done for the arrogant narcissistic corrupt illegal indonesian kenyan sociopayh liar in chief so it can live its grand imperial golf lifestyle on backs of tax paying US citizen serfs and peasants. 

Fri, 05/09/2014 - 11:04 | 4743380 Dr. Engali
Dr. Engali's picture

Hell, right now I would settle for not having a daily dose of Zero's ugly mug and his teleprompter on teevee telling me how good things are and how evil anybody is who opposes him. 

Fri, 05/09/2014 - 11:35 | 4743530 drendebe10
drendebe10's picture

Sandpaper its lying skin off and bury it in salt.

Fri, 05/09/2014 - 14:59 | 4744405 Cathartes Aura
Cathartes Aura's picture

consider not watching/owning/contributing to TeeVee.

Fri, 05/09/2014 - 11:04 | 4743381 lordylord
lordylord's picture

"I think a lot of people aren't asking the government to fix the problems, just to get the fuck off their backs, and stop spying on them, regulating and taxing them to death."

Government justifies regulation and taxation by claiming to be  helping or fixing some problem.  Your claim is just flat out wrong.

Fri, 05/09/2014 - 11:12 | 4743424 Harbanger
Harbanger's picture

You're both right.  He's describing libertarians and conservatives, you're describing liberals and the FSA.

Fri, 05/09/2014 - 11:33 | 4743522 Al Huxley
Al Huxley's picture

Just because the government claims something neither makes it true, nor makes it true that the people believe what they're saying.  When the fuck does the government NOT claim that whatever they're doing is to 'help the average guy'.  Fucking TARP was claimed to be about helping the average guy.

Fri, 05/09/2014 - 13:37 | 4744032 lordylord
lordylord's picture

You are arguing claims I never made, buddy.  How about some reading comprehension around here. I won't even waste my time. 

Fri, 05/09/2014 - 13:49 | 4744107 kchrisc
kchrisc's picture

There are only two types of Americans right now:

1) The sheeple that don't understand the crushing weight of the government and banksters that is upon them.

and 2) Those that do and are doing all they can to get out from under it.

“Lighten the load, throw the government and bankster criminals overboard.”

Fri, 05/09/2014 - 17:52 | 4744917 FredFlintstone
FredFlintstone's picture

3) Government and banksters who are piling on

Fri, 05/09/2014 - 11:33 | 4743510 zaphod42
zaphod42's picture

American consumer is busy trying to keep up with real inflation in necessaries - food & energy.  They cannot buy screwdrivers at WalMart or anywhere else.  But if they absolutely, totally NEED a screwdriver, they have to scrunch it into their budget, and that means the lowest price possible.  Might be WalMart, maybe Target, perhaps even flea market or hock-shop if they are smart about it.  

Unless and until the wage earners are being paid sufficiently, they will be unable to turn this economy around.  Since Wall Street has educated Corporations that the way to higher stock price (and bonus) is through greater profits, and that means lower pay to the workers, and fewer workers, that is not happening today.  They (Corporations/Wall Street) do not recognize that wage earners are the consumers businesses need to buy their goods.  You cannot kill the goose that lays the golden eggs, and still get golden eggs.  Just short term roast goose.

Craig

Fri, 05/09/2014 - 16:08 | 4744675 TBT or not TBT
TBT or not TBT's picture

Right, we should totally go backward to a time of lower productivity per worker. Let's make people dig ditches manually. Or go one better, make them use spoons. A lot of holes will need digging.

Fri, 05/09/2014 - 13:35 | 4744051 Telemakhos
Telemakhos's picture

The contrary position (not to troll, but because there's an argument that I want to test) is that it's natural for consumers to seek the lowest price, which, combined with the general principle of efficiencies of scale, predicts that Wal-Mart will put Mom-and-Pops out of business.  Mom-and-Pops, like Wal-Mart, are middlemen who profit by marking up the wholesale price to retail, that is, to the consumer's detriment: they only distribute goods, creating nothing, and thus their profit on those goods is merely parasitic in the larger scheme of transactions between the ultimate consumer and the original maker.  The parasite who sucks the least money out of the consumer, is, in the end, the one the consumer most tolerates.  Add to this the diversity of products available at Wal-Mart, and it makes sense for consumers to consolidate their shopping in one trip instead of visiting several smaller stores specializing in certain classes of merchandise.

Why should either the consumers or Wal-Mart be blamed for that?  The consumers have a simple desire to minimize their costs.  Wal-Mart fulfills that desire better than the Mom-and-Pops.  This is a natural progression in the development of retail, brought about by greater capital availability, logistical support, and scale.  

By making the artificial decision to avoid Wal-Mart and pay higher prices at Mom-and-Pops, the consumer would, in effect, be subsidizing unnecessary employment in the distributive sector, adding nothing to production of goods (manufactured or grown).  One could make the argument (and I'm sure someone probably has) that state-supplied welfare has the same effect.  Since the distributive sector produces nothing, but sucks money out of the producer-consumer equation, there's little difference between having all consumers be gypped of a few bucks to support the distributive workers at Mom-and-Pops and all consumers be gypped of a few bucks in taxes to support the same people when out of work.

That argument doesn't glorify or humanize retail: such humanization of distribution is an important part of seeing the shopkeeper and his employees as part of a golden "middle America," but the argument against Mom-and-Pops would claim that seeing the shopkeepers as essential is a hollow vision of the middle class, glorifying parasitic inefficiency on the same level as productive work like manufacturing, service, and agriculture.  That's got deep ideological implications for what the "middle class" is, so the argument would likely be controversial.  Also, it could be seen as a specific branch of the more general argument that increased efficiency inevitably leads to unemployment, as fewer workers in an age of mechanization and advanced logistics are necessary to satisfy consumers' demands.  While the general theory of unemployement through greater efficiency does describe many effects seen today, it doesn't offer a solution for the employment crisis that it predicts must come.  One might note here, however, that a version of the same theory was available even in the sixteenth century: Thomas More's Utopia describes a world of universal employment achieved by the reduction of working hours; it's also an unfree regime akin to communism.

Fri, 05/09/2014 - 14:30 | 4744285 KCMLO
KCMLO's picture

I'm one of those "always buy from Mom & Pop" kind of people and haven't set foot in a Walmart in years.  Your observation is extremely astute regarding overall inefficiencies in distribution and it really made me think about my position.

I choose to support local shop keepers out of pure selfishness.  I would rather spend a slightly more amount of money on goods locally so that my money stays... local.  Of course that's not true, they're paying distributors all over the world just like Walmart, but if the shopkeeper is also may neighbor and they are able to pay their mortgage, property taxes, etc.  then that money comes back (in fractions admittedly) right back to where I live. 

I've also frequently been able to help out some of these folks who I now know personally and in return get goods in trade.  Not a bad arrangement if our wage/currency crisis continues to worsen. 

Fri, 05/09/2014 - 15:15 | 4744469 Telemakhos
Telemakhos's picture

The latter parts of your comments point to where the purely economic argument fails: there can be a human element to transactions.  Wal-Mart seems to do its best to eliminate that element: you rarely know anyone in a Wal-Mart, and the service people are kept to a minimum number necessary to handle the present customers, which minimizes the service-customer interaction.  The ideal Mom-and-Pop, on the other end of the efficiency scale, probably tries to maximize its humanization: you interact with the owner and employees, you know their names, you care about them.  There's a psychological benefit there that isn't present at Wal-Mart.  The Mom-and-Pop's position is that the value of humanization offsets the difference in price between the stores, and that choosing always to seek the lowest possible cost is psychopathic.  The counterargument on behalf of Wal-Mart is that humanization of lucre is illusory, and that middlemen who project a friendly countenance are motivated by the desire to justify their higher prices.

In the final analysis, the decision to buy, and where to buy, rests with the individual, and so it's a value decision on his part as to seek the lowest possible price, regardless of other factors, or to pay higher prices for the satisfaction of feeling that his commerce was more human and responsible.  Neither I nor either side of the argument should be able to make that decision for the individual, because that decision is fundamental to liberty: it's a branch of the more general question of the relative values of private property and communal benefit.

Fri, 05/09/2014 - 15:03 | 4744423 Citxmech
Citxmech's picture

The extension of your concept is that retail commerce ends up being conducted through online outlets like Amazon.  Why have the inefficiencies of brick and morter?

Personally, I think I get a tangible benefit for my money from the mom and pop retailers.  I buy my produce direct from local farmers at the market for instance.  Farm to table with no middlemen.  Way better quality and accountability.  

Another example is the local old timey hardware store which has more knowledge in one of it's employee than the entire staff at any Home Depot I've been to.

Local resiliancy is a community benefit worth paying for.  

Mon, 05/12/2014 - 14:10 | 4751501 fallout11
fallout11's picture

Excellent point Telemakhos, and exactly why capitalism tends to produce monopolies.....because whoever is the most efficient, lowest cost provider of an identical good or service inevitably gains ALL of the market share. Further, without competition funds formerly spent on R&D, product and vendor differentition, advertising, and similar can be saved as well (lowering costs).

Fri, 05/09/2014 - 13:14 | 4743953 doctor10
doctor10's picture

Small business is the enemy of big government. Big government needs licensure, taxation, insurance and regulatory requirments to justify its existence and expansion.

 

All that destroys capital and small business

Fri, 05/09/2014 - 17:08 | 4744832 CoastalCowboy
CoastalCowboy's picture

You nailed it doctor10.

Small business is the enemy of the fascistic control grid that is being constructed. The government uses the parasitic relationship it has with the megacorps to implement policies that it cannot do on its own. While the megacorps use the power of government to develop sanctioned monopolistic powers.

It's all about control nothing more and nothing less.

I hate to tell these sacks of economy destroying shit that starting small businesses have been the only way I and many of my friends have been able to make a living since the economic collapse.

We lost our jobs, and nobody wanted us so we were forced into entrepreneurship. It beats the hell out of sucking government tit or playing megacorp PC bullshit.

Fri, 05/09/2014 - 10:46 | 4743297 BullyBearish
BullyBearish's picture

JOLTS report from this morning:

The March Job Openings and Labor Turnover (JOLTS) report showed job openings fell 111,000 in the month to 4,014,000 after climbing 251,000 to 4,125,000 in February (revised down from a 299,000 increase to 4,173,000). February openings were a six-year high.

Hirings slid 74,000 to 4,625,000 after February's 183,000 rebound to 4,699,000 (revised from 71,000 to 4,587,000). Quitters rose 1,000 to 2,476,000 following the 107,000 increase previously to 2,475,000 (revised from 2,382,000). Though dated, these figures are part of Federal Reserve Chair Janet Yellen's labor market watch list.



Read more: http://www.nasdaq.com/article/us-economics-march-jolts-report-shows-job-openings-fall-cm351845#ixzz31EJSX5hp

Fri, 05/09/2014 - 10:47 | 4743299 OC Sure
OC Sure's picture

What tyranny wants tyranny takes.

Fri, 05/09/2014 - 11:41 | 4743554 CPL
CPL's picture

Only if you give it your time, energy and treat it like it deserves something.

Fri, 05/09/2014 - 12:12 | 4743685 OC Sure
OC Sure's picture

No. The nature of tyranny is to take regardless of reciprocity from the subject; therefore, the means of tyranny's nature is force.

Fri, 05/09/2014 - 10:49 | 4743304 centerline
centerline's picture

No worries CHS, .gov will figure out a way to tax the fuck out of the gypsy worker too.

Fri, 05/09/2014 - 11:10 | 4743413 Raging Debate
Raging Debate's picture

Centerline - They already are. I got a notice from IRS that my one subcontactor's 1099 was filled out improperly from 2012 so expect 28% interest on the employees income which was $13,000 and pay withholding Soon I'll get a tax bill for $4k including penalty and interest.

I owe $1,900 to State of Maine. The bill I got was $2,100. Penalties and interest for "not paying". I called with online banking in front of me showing those two payments supposedly "missing" had cleared. Now I have to go to the bank and get them special clearance codes from the bank.

Back in 2011 I was forced by the State of NH to pay $7,000 for employees on UI going back to 2007. I called the state and they said it was a retroactive law that had passed. So the UI I paid as a social contract was broken. I told them I was going to head up to Concord with all my payments to UI and a lawyer and that I demanded a hearing. The next day they took the money right out of my bank account.

Behaving honestly isnt working. Perhaps it is better if I pay no taxes for a year, pack my bags and head out to South America. The rich escape taxation and the poor having nothing to tax that leaves the middle class....

Fri, 05/09/2014 - 11:22 | 4743470 zaphod42
zaphod42's picture

How did you fare with your lawyers in NH?  A bill that reaches back like you described is called "ex-post facto" and is against the Constitution.  You should have won easily.

Craig

Fri, 05/09/2014 - 11:35 | 4743535 Dingleberry
Dingleberry's picture

no. Cali passed a tax law retroactive on the "rich" and they got hosed too.

Perhaps it applies to criminal law only?

Fri, 05/09/2014 - 11:53 | 4743617 Raging Debate
Raging Debate's picture

Zaphod42 - She wasn't going to take the case on contingency. Fighting the state to get my money back would have been a wash. I moved my business out of state. I had moved to Maine in 2004 because the politics were horrible. Female dominated state legislature that had come up from MA in the mid 1990's. Few know the state of NH went bankrupt in 2011.
Maine politically had changed over 40 years, people back then moved from Maine now it is a good state.

You pay income tax but the courts aren't the tax collector so they dont use cops to harrass the people. Not happy with them "losing payment" scam they just pulled though. I do not have time for this shit.

I am a data analysts and marketer. I learned database programming this last year to save labor costs and you know what? It is in demand in every country. I know spanish and always got along with people from latin America. I think I have decided I will leave next year. The culture is rotten to the core now. Your either connected to the government or you get ass-reamed. I'll take a job at someplace down very south as a DBA, think I'll do tourism industry. I am a bit sick of marketing it is always shades of grey even in better times.

Fri, 05/09/2014 - 11:40 | 4743557 centerline
centerline's picture

Sorry to hear RD.  I already have some experience with working across various state lines.  Continues to amaze me how stupid it all is.  There is no way most people can stay in compliance.  It is all so complicated and mired in numerous statutes, rules and laws.  Almost becomes a full time job just trying to sort out the endless line of assholes that are supposedly due $ for whatever reason.

Fri, 05/09/2014 - 12:02 | 4743656 Raging Debate
Raging Debate's picture

Centerline - Thank you. I didn't complain when I didn't pay enough in 2011 and my income was decent that year so I owed money, despite having it deducted by payroll. I fired my CPA and bookeeper. I paid a price for a learning curve. I don't blame government for that and I paid nearly all of it off.

But the rest of what I mentioned was theft - pure and simple. You ever seen a 1099? It is the friggin easiest form in the world. UI was quartely payments. All were made. Paying Maine and having them misplace payment is a scam for penalties and interest. This was very recently.

I complied and all it did was point me out as a stooge that had something left to rob.

Fri, 05/09/2014 - 12:07 | 4743676 centerline
centerline's picture

I have had friends who have been shaken down in a similar manner.  One decided to take it to the mat.  Cost him a bundle.  He was really pissed off though.  The net difference in the end was like $100 - and I think it was the State that owed him!

It's going to get alot worse.  At some point these agencies are push the wrong people the wrong way.  I definately sense a dramatic rise in violence coming up.  So does the government, which explains the massive ammo purchases for nearly every agency.

Fri, 05/09/2014 - 10:50 | 4743305 Kaiser Sousa
Kaiser Sousa's picture

"The Destruction of Small Business and the Eradication of the Middle Class..."

there its fixed.

Fri, 05/09/2014 - 10:50 | 4743307 Comte d'herblay
Comte d'herblay's picture

None of the nostrums suggested in this piece will work over time.

e.g. Sharing kitchens by restaurants.  

That destroys jobs in the Kitchen appliance manufacturers and others dependent on those employees for their jobs. 

At best it substitutes one class of employees for another a zero sum game.

The ONLY nostrums that will work over time are these three:

1) a dramatic decrease of a billion or so human beans. Two billion would be better.

2) Inventors of products and services that require billions of well paid employees

3) some combination of the two 

The only other possibility Kurt Vonnegut dealt with decades ago. 

 

Fri, 05/09/2014 - 10:52 | 4743326 centerline
centerline's picture

Within the current ponzi paradigm it would called economic cannabalism.  That is what is happening now and will continue until the system outright fails.

Fri, 05/09/2014 - 14:25 | 4744250 Telemakhos
Telemakhos's picture

I upvoted you because, while I disagree with your three proposals (which I suspect earned you the others' downvotes), I think you're right that the overhead-sharing and independent contractor model of employment are not reasonable solutions.

A decrease in population likely won't solve employment issues, most simply because it decreases demand.  The percent of population employed does not depend on the overall size of the population, but on things like degree of mechanization and the demand for goods and services.

Likewise, you can't count on inventors of unknown and possible impossible technologies to solve problems.  Technology from the industrial revolution onward has generally increased efficiency and reduced the numbers of workers needed to satisfy consumer demand: fewer workers produce more crops, goods, and services.

As for the points that I agree with: kitchen-sharing is an especially awful example of how to increase efficiency.  Few or no restaurant owners build and maintain kitchens with the surplus capacity to support a second restaurant, and cook staff generally don't laze about idly.  A kitchen-sharing restaurant consortium would have to build entirely new facilities capable of supporting multiple restaurants, and the cost savings are not going to be as high as the author imagines.  If efficiency gains could be made in that sector, they would already have been made: restaurateurs work in a mature field that conducts an amazing amount of research on efficiency.

Likewise, the freelancer model of employment only works well in fields of highly volatile demand, where it makes sense to contract out work on specific jobs.  You don't run a factory that way or a kitchen.  It does work for some small start-ups, which are the author's main focus, but that's an initial stage of development: entrepreneurs generally want to grow their businesses into stable income sources, which in turn usually implies stable employment for their workers.

The author's antepenultimate and penultimate paragaphs, once you cut through the buzzword mumbo-jumbo, constitute an example of short-term thinking.  Businesses engage in debt not because their owners are stupid, but because the profit that results in the long run exceeds the debt service costs and depreciation on assets purchased with that capital.  That's how you build a stable, lasting business rather than a short-term startup that dies before it reaches any kind of maturity: you plan for the long-term.  Like with the author's views on freelance/contract employment, his debt-free approach is only appropriate for short-term projects of marginal profitability.

No rent, no employees, no overhead, no debt, but "nuture human and social capital?"  Really?  And how exactly do you "nurture human and social capital" without any stability or long-term plans, investment, or even a fixed place of business?

This sounds more like a rallying cry for some inexperienced, ideologically motivated crowd mixing convenient parts of the libertarian and Occupy positions, eager for buzzwords (sickcare! junk regulations! middle class! nuture human capital! cross-fertilizaton of social capital!) and empty promises of What Might Be If Reality Were Totally Different, than it does a sound business strategy.

Fri, 05/09/2014 - 15:06 | 4744442 Citxmech
Citxmech's picture

You know who "shares kitchens?"  The LDS community.  Many still have communal or mobile canning kitchens the community uses to prep - a trend that may be expanding to other likeminded types: 

http://www.pickyourown.org/canneries.htm

Fri, 05/09/2014 - 12:20 | 4743398 MedicalQuack
MedicalQuack's picture

Today we have the Pope calling for "Legitimate Redistribution" of money around the world.  It's good statement and wish it could happen but the US is under the Attack of the Killer Algorithms and as you folks all know here, the Lord can't stop the algos. 

Remember DOJ Lanny?  He truly represents what we all despise. I don't know how long it will take to finally sink in but it's all computer code running on servers 24/7 that addicts you and takes your money.  Credit card fees, bank fees, 401k fees, all done by algorithms...Listen to him on the video clip "it would have killed my career to prosecute the banks"..geez..

Sadly the President and most of the government executives live in "The Grays" and they can't tell the difference between virtual world values and the real world and this says it.  Even the pope came out today wanting a legitimate redistribution of wealth..won't happen as long as we are under the Attack of the Killer Algorithms and Algo Duping persists.

http://ducknetweb.blogspot.com/2014/05/pope-demands-legitimate-redistrib...

Everyone can have their own opinion but if you want the "real" world on what's really happening this is it.  Here's a collection of videos from people smarter than me and the Quant documentary here is pretty astounding as they were right on the money and the video was released 2 days before the flash crash. 

http://www.ducknet.net/attack-of-the-killer-algorithms/

It's up to you as far as what you want to think, who you want to blame but remember Obama said with Healthcare.Gov, he doesn't write code so he couldn't fix it, same thing applies to markets and everywhere else in a broken system. To me anyway the recent Obama/Biden selfie kind of says it all, they too are in "The Grays" and embrace virtual values over real world values. 

 

Fri, 05/09/2014 - 14:24 | 4743998 cro_maat
cro_maat's picture

The Pope is calling for redistribution?!!  LMAO!!

Is the Vatican planning on distributing their trillions that they have ammassed over 18 centuries of wars, inquistitions, ponzi schemes, coercion, political aliances, Jesuit skulduggery, etc.? I think not. There is a reason the Vatican is a fortress and the Pope Mobile is armor shielded.

Fri, 05/09/2014 - 11:08 | 4743400 intric8
intric8's picture

We are all headed towards the lower rungs of maslows pyramid

Fri, 05/09/2014 - 11:23 | 4743474 zaphod42
zaphod42's picture

Just call it the "race to the bottom."  

Wheeee!!!!!

 

Craig

Fri, 05/09/2014 - 15:07 | 4744443 Citxmech
Citxmech's picture

That is a very chilling way to put it.

Fri, 05/09/2014 - 17:39 | 4744898 FredFlintstone
FredFlintstone's picture

You think I will become focused on my physical needs again like sex?

Fri, 05/09/2014 - 11:09 | 4743401 Tabarnaque
Tabarnaque's picture

But the BLS birth death model said that last month 234,000 jobs were created by small businesses! No contradiction here, right?!  

Fri, 05/09/2014 - 11:25 | 4743478 the grateful un...
the grateful unemployed's picture

the idea here may be that people are already working, they just aren't being paid for it. i know a lot of people who do volunteer work, help friends family and strangers, and receive no compensation. add to that people working in the shadow economy, cash under the table, and the real economy is twice as large as you think. people are not sitting around on their butts with nothing to do. while some of us dont like boomers, boomers are not the motor home consumer generation that their parents were after retirement, boomers want to stay active, and contribute something. to that purpose all these people need to be counted, and in a theoretical economic sense they need to be paid, (that of course is highly HIGHLY inflationary) even if everyone who mowed their neighbors lawn while they are sick got $5 the roof would blow off. where is the money coming from first?? imagine that everyone who did something for nothing or was underpaid was paid something or paid fairly for their work?? so its an academic economy run by academics like it was a controlled case study. they have an interest in NOT counting you and to that end they have had to raise the stakes, counting fewer and fewer people all the time. (as well the workers who have been automated out of jobs have a right to the profits made by machines) thats another story

Fri, 05/09/2014 - 13:27 | 4744010 Totentänzerlied
Totentänzerlied's picture

Unpaid "work" has never been counted. Work compensated in things other than monetary wages or financial assets is not part of modern standard economics.

" imagine that everyone who did something for nothing or was underpaid was paid something or paid fairly for their work??"

Many kinds of labor really do have no market value, and/or no monetary (exchange) value, whatsoever, or even negative value.

If the real economy is larger than econometrics indicate, well, no surprise there, no one ever claimed it included everything, and it never has.

"as well the workers who have been automated out of jobs have a right to the profits made by machines"

No, no they don't, because the machines - paid for by someone else (consumers, in the form of company profits) - are doing the work, and not them...

Fri, 05/09/2014 - 11:09 | 4743403 NotAMathWhiz
NotAMathWhiz's picture

Sorry, but there is absolutely 0 reason to start a legitimate on-the-books small business in a socialist redistributive society.  Next time start with a chart showing government transfer payments, then stop there.

Fri, 05/09/2014 - 11:17 | 4743439 falak pema
falak pema's picture

there is, its called the inalieniable right to pursue survival with personal freedom; even if it means paying taxes. 

Why be owned by others totally

Awaiting the level playing field which will result when "we the people" win their country back, --something the US citizen has forgotton how to churn out where it really counts :  at ballot booth ---every freedom loving person has the duty to serve his own well being by fighting the good fight of entrepreneurial innovation, instead of reclining on his sofa as corporate sold out shill. Double and ignominious penetration by the Oligarchy world of body and soul.

Sat, 05/10/2014 - 04:17 | 4745738 sethstorm
sethstorm's picture

You presume that everyone is suited to the world of small business.  Plenty of others do well when they don't have to wonder about the stability or existence of the company.

Fri, 05/09/2014 - 11:42 | 4743564 venturen
venturen's picture

WRONG! You need to get the Wall Street Mafia to sell it in an IPO for 1000's times sales...to some stupid pension managers. Then take the money and move it offshore with all the other finacial elite....or just call it a hedgefund and pay low taxes at the very least!

Fri, 05/09/2014 - 11:09 | 4743404 the grateful un...
the grateful unemployed's picture

its also baked in the janet yellen fed reserve polilcy (see her comments on the feds regulatory efforts to aid fiscal policy) if only SB lending would go to non profits, for her part Ellen Brown wants to establish a STATE bank in California in order to capture the CC fees, and return them to the people. there's a lot of bank deregulating that could be done. regulating TBTF hasn't gotten off the snide, and some are questioning fractional reserve banking, wil the fed consent to regulate that? hell no, the fed is a wall street washington front. lately the indepent fed meme has faded, critics know it never was. but if you abolish the fed they would need to steal from you in broad daylight (well they already do)

Fri, 05/09/2014 - 11:19 | 4743449 zaphod42
zaphod42's picture

Interesting.  If you want a projection on the Real Estate "recovery", consider,

"Commercial landlords have inflated expectations of rent, thanks to the Fed-induced real estate bubble: since they overpaid for the building, they need to charge high rents to cover their mortgage payments and property taxes."

When push comes to shove, value of real estate comes down to users' ability to pay, and market valuation by rent, and not by asset appreciation through speculation.  Since residential real estate is priced higher than the user's ability to pay either purchase price or rent, residential prices must come down.  Similary, here, we see that commercial real estate must also be valued by user's ability to pay.  If small businesses take the author's advice en masse, it follows that commercial real estate prices will drop as well. 

The longer the 'recovery' continues, the higher the price will be and the greater the adjustment must be.  And, if real estate prices/rents suck up capital, then other, value driving investments, diminish and commercial users are less able to pay as their revenues begin to dry up as well.  

Today we have ever increasing energy costs (driven by the much higher production costs arising from frac'd oil and gas and other tight oil/oil sands and very heavy/sour oil production) adding to and compounding these problems - sucking off even more capital.  

Not a good time.  At least for the 95%,

Craig

Fri, 05/09/2014 - 11:47 | 4743589 the grateful un...
the grateful unemployed's picture

they have to raise their rents because they are losing asset value (against a mortgage) enter the all cash real estate market. credit has to contract under these circumstances, and that means trouble. negative money velocity its a coming. as soon as the fed prints it it gets taken out of circulation

Fri, 05/09/2014 - 11:34 | 4743465 Hongcha
Hongcha's picture

All the pressure points are in alignment and the fabric of this country is coming down like a circus tent.  It is coming down and there is no hope of reviving it on any kind of scale.  as I told my wife, in 2009, taxes will start going up and will continue to rise until the entire system crashes under its own weight.

There is no one else to take from after the rich have protected themselves and rewritten the rules and after the Free Shit Army gets its dole in return for votes.

'White people playing by the rules.'  Brethren, I used to be like that.  It is time to start thinking in terms of guerilla warfare, not standing up in the trenches in a red coat with a target on your back.

Fri, 05/09/2014 - 11:46 | 4743583 centerline
centerline's picture

Yup.  Started warming my wife up to all this back in 2009 or so.  Standard of living going down... taxes going up... everything we need getting more expensive.  Anyone not prepared for this, or unwilling to accept it as reality, is going to be miserable.

Fri, 05/09/2014 - 12:48 | 4743817 fonzannoon
fonzannoon's picture

I am not sure it's going to be any better even if you have accepted it.

Fri, 05/09/2014 - 11:23 | 4743473 Duc888
Duc888's picture

Al Huxley: I think a lot of people aren't asking the government to fix the problems, just to get the fuck off their backs, and stop spying on them, regulating and taxing them to death.

 

...and there in lay the problem.  Gov sees it as THEIR job to micro manage you (private businesses and individuals)  and siphon of your lifeblood to feed them.  Gov has been the biggest growth industry in the last 20 years.  Gov is a corporation.  Corporate law states they have to do everything in their power to maximize profit for the shareholders. 

 

I'd say Govs "job" appears to be to insert themselves up your ass in any way possible.  They're doing a wonderful job.

Fri, 05/09/2014 - 13:14 | 4743952 Hongcha
Hongcha's picture

Duc888; a malignant tumor has no further duty in its charter, than to proliferate and destroy the host organism.

Fri, 05/09/2014 - 11:27 | 4743488 dontgoforit
dontgoforit's picture

We're goin' down, baby.

Fri, 05/09/2014 - 12:01 | 4743652 zaphod42
zaphod42's picture

How LOW can you GO??

-

  -

    -

      -

        -

          -

            -

            ::SPLAT::

 

Craig

Fri, 05/09/2014 - 11:38 | 4743542 Bemused Observer
Bemused Observer's picture

Because the 'fixes' they propose only end up helping the big corporations, and NOT the small businesses we are always told about.

Do those big tax breaks benefit small businesses the way they benefit the big guys?

How does the opportunity to outsource for cheaper labor benefit your neighborhood dry cleaners?

How does deregulation help a small business starting out when none of them really apply to him?

If they really want to help, then write your rules in such a way that they FAVOR the small business instead of giving yet more to the big ones who don't need it. They push for these rule changes and say it's for YOUR benefit, when in fact they KNOW it's all going to go to them.

Fri, 05/09/2014 - 11:53 | 4743593 Emergency Ward
Emergency Ward's picture

One take I got from OWS crowd was antagonism toward "entrepreneurs" -- this stance was not thought through carefully by the masses but was put out as part of the message put out by the Soros-paid "insiders" (the big-government regulatory statists wearing populist masks).  An actual entrepreneur is a threat to both the crony-corporatocracy and the legitimacy of the welfare state ("you didn't build that, you need us, you can't make it on your own").

Fri, 05/09/2014 - 11:53 | 4743621 the grateful un...
the grateful unemployed's picture

their definition of enterpreneur is someone who goes from concept to wall street in a single leap. the capital investment environment has to be changed. part of the offshoot is a lot of technology which has no economic benefit (smart phones)

Fri, 05/09/2014 - 12:10 | 4743682 Emergency Ward
Emergency Ward's picture

Their definition omits the concept of "risk", thereby expanding the definition to include crony-corporatists and bankster types who pay off their pals in government protect them from risk.......

Fri, 05/09/2014 - 13:37 | 4744061 Totentänzerlied
Totentänzerlied's picture

A perverse definition which excludes the vast majority of all real entrepreneurs now and ever. Sounds like low-IQ socialist-cum-populist (very American) propaganda to me.

Fri, 05/09/2014 - 11:39 | 4743548 seek
seek's picture

All around me I'm surrounded by strip malls and small office complexes that are more vacant than filled, every opening being a small business that died.

CHS is on to something with the pay no rent comment, though. With the unlimited dollars coming from the Fed, money gets poured into real estate, propping up values of those strip malls and office complexes. To cover the mortgage on the inflated values, rents need to be higher than the market can natually sustain. Just one more "little" side effect of the Fed that's fucking the real economy.

One interesting side effect of this -- I've mentioned my brother's business involving auto parts recycling here before, and he closed his doors last month, thinking he would be totally unemployed. Funny thing, he discovered without the rent and utilities (which are loaded with city taxes that exceed the value of the utility costs themselves) and associated overhead of his shop, he could be profitable at 1/4 the revenue and be doing well at 1/3, and that he could do 1/3 of his previous revenues through supporting a few key customers with nothing more than a flatbed truck. So he is, working 2 days a week instead of 6.

Fascinating thing here is, the building owner has lost rent, the city taxes up the wazoo, the power and water companies lost a customer and he personally is doing much, much better without them. This is exactly what happens with a parasite-based economy.

Fri, 05/09/2014 - 11:49 | 4743601 centerline
centerline's picture

No doubt a dual economy will result.  I can already imagine the drooling over a 100% electronic currency system so that all transactions can get monitored.  At some point, the beat down winds up as straight barter.  What a disaster.

Fri, 05/09/2014 - 13:04 | 4743898 Miffed Microbio...
Miffed Microbiologist's picture

I agree centerline. I am shocked how much my world has become underground in terms of transactions as well as seeking those who understand the reasons for this. It's so funny to meet these individuals. We are naturally very suspicious of any interactions so engagement is tenuous and nuanced. I feel I'm living in the modern version of the Dark Ages without the requisite Plague ( hmmm, I may be a bit premature in my vision). Agreements are sealed with maybe a head nod or handshake never verbal or written and certainly never virtual. Honor is the code.

I have found flying under the radar quite profitable but more importantly I have developed deep lasting friendships that never would have realized in any other circumstance.

Miffed;-)

Fri, 05/09/2014 - 13:45 | 4744095 Totentänzerlied
Totentänzerlied's picture

I think that is the one place cryptocurrencies have a major role to potentially play - local gray markets, functioning more like scrip, but technically convertible currency and therefore fungible. Safer than cash in some ways, and entirely so, once the cash receipt snitching programs (get lotto tickets, cash, or prizes for submitting people's cash receipts to the relevant tax authority) are unveiled.

Fri, 05/09/2014 - 11:50 | 4743603 the grateful un...
the grateful unemployed's picture

you just made the authors point, but this is a desirable thing? not sure if youre in CA, but the great redevelopment boondoggle finally ended, a means by which low rent commercial re is taken off the market. one mans blighted neighborhood is anothers opportunity. as long as the banks dont want to wind down bad assets there is no recovery

Fri, 05/09/2014 - 12:13 | 4743691 seek
seek's picture

"this is a desirable thing?"

No, it's a terrible, terrible thing. This isn't an indicator of a vibrant economy, it's an indicator of collapse. However, to expect people to act against their interests (e.g. in my brother's case go bankrupt by taking out loans to support a failing business' expensense because it keeps money flowing into banks via loans and the government via taxes) is crazy, and simply won't happen long term.

The key point is this is happening because as you say, banks (and the Fed) don't want to wind down bad assets, and without the control freaks letting market forces work, we end up with all sorts of distortions that manifest themselves in negative ways. In this case, propping up CRE is resulting in the shutdown of small businesses, unemployment, and lost tax revenue.

The economy is being destroyed by those that hold back market forces in order to preserve the assets of the protected class. Until this changes, the middle class will disappear along with the businesses and jobs that support the middle class. Without change to this, eventually the parasites will have nothing left to feed on.

 

Fri, 05/09/2014 - 13:39 | 4744072 Raging Debate
Raging Debate's picture

Seek - It is a barbell economy already. The parasites can continue to live just fine. They'll keep cutting the social safety net and military which we don't need as much anymore now that the financiers have passed the reserve currency peg off to China. That is the job of the host currency.

So parasites can live here for a long, long time off 300 million people making $12 an hour. How did the Soviets do it for 40 years after WW2?

Good for your brother. He is sharp. I did the same thing and work leas now too. But guess what, like me once those funds show up in the bank and he does tax filings he will become a target. Or he can go all cash but if I really need to live in a black market economy the views are nicer in other countries that don't have nuclear weapons or the threat of being turned to ash. And if a revolution occurs you better bet your bippy the traitors pretending to be American will shut out the lights - literally. These parasites are like termites. The entire house has to be burned down. Likely, these will do scorched earth first which is what war gaming on supercomuters would tell them what to do.

Fri, 05/09/2014 - 15:12 | 4744462 Citxmech
Citxmech's picture

Just like there's two sides to every trade, there is a wealth of opportunity in the collapse of this system - you just have to understand what the new economy will look like and be willing to accept a completely different (downsized) lifestyle.

Fri, 05/09/2014 - 11:40 | 4743550 venturen
venturen's picture

This is how you grow socialism with a dose of facism. Force the people to work for state funded entities, by destroying the possible private companies while funding cronyisms The rescued cronies....of wall street get to buy up all resources thereby driving a stake in the heart of those that don't get trillions in printed dollars! 

 

Listen for that swirling sound in your communitee....that is comrade Obama organizing your communitee into a liberal work camp run by cronies!

Fri, 05/09/2014 - 11:45 | 4743578 overmedicatedun...
overmedicatedundersexed's picture

keep going, what other choice do we have..life is more than rules taxes and corrupt governments- keep on truck'n til we meet again.

Fri, 05/09/2014 - 11:51 | 4743597 I Write Code
I Write Code's picture

The way to destroy fixed costs and labor overhead is to pay no business rent, own no vehicles, have no employees, owe no debt, own your own tools/means of production and nurture human and social capital.

Good advice, for 1980.  But in the twenty-first century individual labor of ANY kind is a losing, no, LOST, proposition.  That Tom Peters crap about being your own brand is as current as your betamax VCR.  The truth is otherwise, create that small business no matter how difficult because it is your only fucking chance.  What is semi-new is that you can do it with far less capital than a generation ago thanks to the Internet and the sweating masses of "mobile creatives" who will work for a pittance because they are starving.

Fri, 05/09/2014 - 11:57 | 4743635 Colonel Klink
Colonel Klink's picture

Because OBAMA, Bernanke, Yellen, the FED, Fraud street, CONgress, and multi national corporations!!!

Fri, 05/09/2014 - 11:59 | 4743648 Duc888
Duc888's picture

 

 

seek: "One interesting side effect of this -- I've mentioned my brother's business involving auto parts recycling here before, and he closed his doors last month, thinking he would be totally unemployed. Funny thing, he discovered without the rent and utilities (which are loaded with city taxes that exceed the value of the utility costs themselves) and associated overhead of his shop, he could be profitable at 1/4 the revenue and be doing well at 1/3, and that he could do 1/3 of his previous revenues through supporting a few key customers with nothing more than a flatbed truck. So he is, working 2 days a week instead of 6."

 

I'm in the process of doing just that.  Moving do a different State that will allow me (at least for now) to run my business in that fashion.  

 

Even if I lose 50% of my business I'll still work less and make more than I do now.....and help starve the Beast at the same time.  win/win.

Fri, 05/09/2014 - 12:23 | 4743722 seek
seek's picture

"Even if I lose 50% of my business I'll still work less and make more than I do now.....and help starve the Beast at the same time.  win/win."

This is what fascinated me with my brother's situation -- TPTB are literally creating the environment where this sort of move is incentivized and accelerated. It's completely contrary to their goals of more control and extracting more money, and is an unintended consequence of them propping up asset values. Both you and my brother will end up being better off financially doing less work, and a huge part of the economic ecosystem takes a hit. It's the economic death spiral happening in front of our very eyes.

Now my expectation is TPTB will have to do something to stop it, so maybe there's a crackdown on home-based businesses. On the local front, I could see someone trying to use zoning to control this, but the towns themselves are more incentivized to support this (with some sort of licensing) since it both keeps money in town through the local jobs, and offers a source of licensing revenue. So it starts to pit governments against each other as well. More signs of a economic death spiral.

Fri, 05/09/2014 - 12:36 | 4743768 the grateful un...
the grateful unemployed's picture

lose 50% of your business but 75% of your overhead? hey isnt that what corporate america is doing? a few years ago alcoa made a blowout quarter but shutting their aluminum plant in the NW and selling the electricity they bought on a futures swap of some kind BACK to the utility.

Fri, 05/09/2014 - 12:43 | 4743802 centerline
centerline's picture

Yeah, but they can't leverage that on an ongoing basis.

Fri, 05/09/2014 - 12:39 | 4743778 centerline
centerline's picture

Seek,

What I think will happen is that we will see a growing divide between communities, local governments/municipalities, states, and the federal government.  At some point, like you said, interests will diverge.  That is when it really gets fugly.

Fri, 05/09/2014 - 12:55 | 4743846 seek
seek's picture

You can already see the cracks forming.

Look at the marijuana situation in Colorado -- it's bringing in millions in tax revenue, but the legalization kills the reason for the DEA to exist at its current levels, and impacts the prison industry. In spite of promises at the Presidential level to not interfere, we're seeing ongoing enforcement at the federal level on a state (and really township-level) activity. What will be interesting is where these law-enforcement conflicts exists is how the Feds will twist things to establish supremacy over county-level enforcement. It's no wonder O has been pressing for a national police force, as it's absolutely needed to keep things going at a Federal level -- without it, the local levels win because they're actually there and have physical jurisdiction if nothing else.

It's funny, you think back to the Constitution and the apportioned tax clause that was overriden by amendment to enable income taxes and realize that if it were still in place, everyone would be on the same page (because all revenues would be collected at the local level.) Just one more nuance that makes me appreciate the founder's wisdom.

Fri, 05/09/2014 - 15:14 | 4744472 Citxmech
Citxmech's picture

National Police?  Isn't that what the FBI is supposed to be?  Do you have a link?  I'd like to read more on this. . . 

Fri, 05/09/2014 - 16:04 | 4744662 seek
seek's picture

It's a mess and a hodge-podge of pointers, but it keeps circling back to some sort of national service program.

Here's some of the proposed legislation: http://en.wikipedia.org/wiki/Universal_National_Service_Act

This is taken wildly out of context, but nonetheless shows that the thinking is a national-level service: http://www.youtube.com/watch?v=_fO-usAlqak

These are consistently framed as peace-corp level operations, but between the way DHS/TSA has been expanded and that no one can get assurances that the "local" peace corp is to be forever unarmed, the whole mess is a bit sketchy.

Completely aside from all this but supporting my notion that they need federal-level influence to override local police, look at the DHS funding local departments, fusion centers, etc. There are lots of fingerprints that they want national level control over police, likely in part due to concerns about the local v. federal issues I mentioned.

Fri, 05/09/2014 - 18:18 | 4744968 Citxmech
Citxmech's picture

Gotcha - Thanks Seek!

On a side note - the DHS seems does seem to have a presence now in every major city.   

Fri, 05/09/2014 - 12:34 | 4743756 smacker
smacker's picture

"Barriers erected by cartels and the government"

One more reason why governments like to eliminate small businesses in favour of large cartels and monopolies is that in the gathering corporatist world we live in, governments find it much much easier to manage and control big businesses. And their rewards (donations and corruption) are much greater.

Sat, 05/10/2014 - 09:11 | 4745870 AdvancingTime
AdvancingTime's picture

Small business, with two to ten employees, are becoming an  endangered species in America. The family business once the backbone of this country is under attack from the unintended consequences of the laws passed in recent years. Inspections, a plethora of permits, licenses, taxes, insurance requirements, and regulations make it almost impossible for a small business to open and operate legally. I run a small business and lease space to many others it is getting far more difficult for small business to survive, more below.

http://brucewilds.blogspot.com/2012/01/small-business-endangered-species...

Fri, 05/09/2014 - 13:22 | 4743995 Duc888
Duc888's picture

seek: "Now my expectation is TPTB will have to do something to stop it, so maybe there's a crackdown on home-based businesses. On the local front, I could see someone trying to use zoning to control this, but the towns themselves are more incentivized to support this (with some sort of licensing) since it both keeps money in town through the local jobs, and offers a source of licensing revenue. So it starts to pit governments against each other as well. More signs of a economic death spiral."

 

You nailed it.  I had a profitable business through the 1990's.  Taxation combined with the crap economy since 2008 changed the economic landscape as well as my business model which used to work so well.  I studied the issue for a long time.  It came down to zoning.  CATO institute wrote a paper a year ago and my State came in dead nutz last.  Worst State in the entire US to Start / Run a small business.  A week ago a poll was taken and 52% of the people living in my State want to move.  I'm on of them.  Depending on how I play this game (rent, fuel, overhead, etc) I'll be able to work less and legally pocket between $14-22K next year and work 35 hrs a week as compared to my 60 hrs a week now.  When I factor in less in car insurance and property taxes,   that's how I arrived at the higher of the two figures.

 

In my particular case, it's all about zoning.

 

 

 

Fri, 05/09/2014 - 18:19 | 4744491 Citxmech
Citxmech's picture

I think you are correct.  For the small business entepreneur - Zoning is the biggest hurdle/obstical to getting going.  I am trying to start my own business right now so I am currently confronting this first hand.  Of course, zoning is a double edged sword - I don't think I should have to finance a friggn "traffic study" for small business on my farm property that will have no employees other than my wife and myself - but I also don't want the neighbor doing all his own electrical work with extension cords to run the pump on his single-walled gasoline storage tank right next to my house - or digging a shallow latrine upslope from my well.

Fri, 05/09/2014 - 15:41 | 4744574 rodonmeguro
rodonmeguro's picture

Overhead: taxes, insurance, lawsuits; why bother trying to start a company when these costs will put you out of business in short order?

Fri, 05/09/2014 - 15:52 | 4744612 Wilcox1
Wilcox1's picture

It does seem that history rhymes and empires get too ridgid and come apart from the inside.  Communication and knowledge sharing made possible by the internet could make it different this time.  A mobile creative class, with its obvious win/win emphasis, might be able to bridge the ridgid structure and the need to change.  

Fri, 05/09/2014 - 16:26 | 4744721 AdvancingTime
AdvancingTime's picture

Small business, with two to ten employees, are becoming an  endangered species in America. The family business once the backbone of this country is under attack from the unintended consequences of the many laws and mandates passed in recent years.

Inspections, a plethora of permits, licenses, taxes, insurance requirements, and regulations make it almost impossible for a small business to open, compete, and operate legally. Big government has become toxic for small business. More on this subject below.

http://brucewilds.blogspot.com/2012/03/small-bussiness-under-attack.html

Fri, 05/09/2014 - 16:29 | 4744741 AdvancingTime
AdvancingTime's picture

According to the Small Business Administration only 10% of Americans own a business and 80% of these are single self employed businesses. This means only 2% of all Americans actually employ at least one non-relative employee. More on this subject in the article below.

http://brucewilds.blogspot.com/2012/01/only-few-are-entrepreneurs.html

Fri, 05/09/2014 - 17:46 | 4744911 Otto Zitte
Otto Zitte's picture

Flip figure 2 vertically and title it "Corrupt Bureaucrazy"

 

Sat, 05/10/2014 - 04:10 | 4745736 sethstorm
sethstorm's picture

So that just means that the stable-as-Fukushima part of the private sector has some decline.

Sat, 05/10/2014 - 08:56 | 4745861 AdvancingTime
AdvancingTime's picture

The reality is that much of what we see on the economic landscape is a mirage, all of us who own businesses would be adding workers if our phone was ringing off the hook and a demand existed for our products, but that situation simply does not exist. Like everyone else in my industry I'm sitting on empty office space and buildings, cutting cost, and waiting for demand to increase.

Constructing more new buildings while paying taxes, insurance, and maintaining a huge supply of empty space makes no sense except to those in government that are not using their own money. It appears many people have been caught up in the hype that things are getting better, but that does not make it so. More on why I and many other small businesses are not hiring in the article below.

http://brucewilds.blogspot.com/2012/11/i-would-be-hiring-if.html

Do NOT follow this link or you will be banned from the site!