I think it's also important to look at how the crisis is affecting not only banks and big companies, but small businesses who face the brunt of the credit crunch and must either downsize or shut down. This article features 7 small businesses that have shut down this year ("Victims of the Crash" as CNN dramatically calls them) and the loss to the community that each one represents. If you look at the reasons why each business faltered, it's interesting to note how everything creates an impact on a smaller, more personal scale. Real-estate prices, dwindling corporate philanthropy, rising costs in food and oil prices, drying up of funds all contributed to these businesses filing for bankruptcy. Of course, there were some non-crisis related factors, like dwindling CD and book sales, but it's the crisis that accelerated these businesses' problems.
Small businesses are a vital part of the American economy. As this article states, they employ half of the non-government labor force, which means that if they are forced to cut jobs, that could increase unemployment drastically. They can help local communities thrive, preserve history and culture (no more circus animal cookies??), and help prevent a few major companies from completely taking over an industry.
While one can argue that in a capitalist economy, a firm that can't operate efficiently can't survive, in this case maybe small businesses should be protected. Is it worth trying to save/protect small businesses directly? If Wall Street and Detroit are being helped, should small businesses be too (which then raises the question of how far should the government go)? Or is the trickle-down effect of the bailout sufficient?
2 comments:
Well it is true small business is a vital part of the American economy. However, I don't think we should protect/save small businesses directly as it is very complicated and costly while the economy can still hit rock bottom with only big firms in trouble.
But maybe we should try to cut tax and have special treaties for small businesses to encourage them to go on and try harder?
I agree with Thang that the government should not protect/save small business directly. The government's direcgt invelovement in saving thousands of problemed small business would raise questions about fairness of policy; such as which business are saved and which are not? and how much to help?
Thus, instead of direct involvement, I think it is better that the government helps them indirectly, such as tax, or employment subsidy etc.
Oh, and I like circus animal cookies too~ :P
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