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ABSTRACT
This paper assesses the evolution of public policy affecting small business in the United States both in terms of content and process since the 1979 publication of David Birch’s Job generation process. It focuses on four major trends – a change in the prevailing policy agenda, the increasing use and importance of carve-outs, the failure to distinguish between small and entrepreneurial business for policy purposes, and the rise and subsequent ebb in small business’s political influence. The paper concludes that the small-business agenda and policy affecting it will continue to evolve with a divide in the priorities among small business and technology-oriented business as one major political party will tend to champion the former and the other will tend to champion the latter.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes
1 Small business has always enjoyed considerable public regard in the United States. Early in the nation’s history, Alexis De Tocqueville noted during his travels an American proclivity to engage in small commercial ventures (de Tocqueville, Citation1843). For years, the Gallup Organization did not even list small business in its annual poll of American institutions’ popularity. Small business’s inclusion made no sense given its historic high regard. Now included, small business consistently places second on the long list, only behind the military, with two-thirds having confidence in it. By contrast, 42% have confidence (“a great deal” or “quite a lot”) in churches or organized religion, 32% in the U.S. Supreme Court, and 21% in big business (Jones, Citation2015).
2 Elsewhere, the author has argued that public policies affecting small business fall in two categories, one support and other impediment reduction. Effectively, the former is an attempt to help small business hurdle competitive/government imposed barriers to success (however defined) while the latter attempts to tear down those barriers (Dennis, Citation2015).
3 The three White House Conferences on Small Business held between 1980 and 1995 all selected delegates in a similar manner. The process essentially involved publicized regional and state meetings open to all small-business owners at which policy issues impacting their firms were discussed/debated. These local participants in turn selected delegates to the national conference in Washington. Each conference produced 60 recommendations. The first two also published a top 15 list based on delegate votes. The 1995 Conference refused to produce a top 15 list for political reasons, but the published vote count allowed any observer to create such a tally. A paid Washington-based staff provided more and less sophisticated issue briefing papers for the delegates, and selected overall break-out issue areas for the discussion, such as capital formation or international trade. As many as 50,000 participated in the first two conferences alone. Staff had little control over delegates’ decisions and priorities.
4 Full disclosure: The author was employed by the NFIB Research Foundation, an affiliate of the largest small business association in the United States, for 38 years and directed all but two of the surveys in the series. The latest edition was produced by Holly Wade as Small business problems and priorities. See Table 5, beginning on page 24 for comparison of relative problem importance over time (Wade, Citation2012). Representativeness is always an issue in an association survey regardless of the organization’s size, and NFIB is a very large one. The NFIB Research Foundation attempted to determine any discrepancies in views held among NFIB members and broader public of small-business owners. Results showed the two populations having similar views on virtually all policy issues (Dennis, Citation2009a).
5 The House Ways and Means Committee is traditionally regarded as the most powerful and prestigious in the U.S. House of Representatives.
6 Robinson–Patman Act was intended to protect small retailers from discriminatory pricing (use of loss-leaders) by large chain stores and leveraging their market power to force small suppliers, typically manufacturers, to lower their prices.
7 In the mid-1970s, small retailers constituted one-third of all employing small businesses. The figure today stands closer to 10%.
8 John Satagaj was former Legislation Counsel for the SBLC from 1985 through his retirement in 2014. Mr Satagaj also produced the original draft of the Regulatory Flexibility Act of 1980.
9 Internally generated funds, pre-tax profits, is the major source of small business finance. In that context, taxes become a primary small business finance issue. However, taxes typically are placed in a category of their own.
10 The downside of deregulation was the dwindling number of small banks, which are significantly more small-business friendly than their larger counter-parts. The impact of bank reregulation [Dodd–Frank Wall Street Reform and Consumer Act of 2011] on small business lending has yet to be evaluated, though early appearances are not positive.
11 The Act established a process when a projected Federal rule was likely to create a “significant impact” on a “substantial number” of small entities. When that occurred, the agency making the rule had to consider alternatives to reduce the burden for small entities without violating the objectives of the rule-making, and implement them where possible. The Office of Advocacy at the Small Business Administration would supervise its implementation.
12 Estimated savings for the years FY 2002 to FY 2006, for example, amounted to $79 billion or about $16 billion annually.
13 The comment refers exclusively to the small business exemption, not to the remainder of the Act which was anything but.
14 Jean-Baptiste Colbert, Louis XIV’S Finance Minister, famously asserted that “the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing”. This principle first enunciated in the seventeenth century proved highly effective in the twenty-first.
15 The 50-employee level is actually not as straightforward as it seems. There are issues involving the count of part-time employees and employees in multiple businesses owned by one employer or, more likely, employer group(s). The latter situation is resolved by “aggregation rules” that no more than a handful of people in the country actually understand.
16 Congress created the SBIC program in 1958 to facilitate the flow of long-term capital to America’s small businesses. SBA partners with private investors to capitalize professionally managed investment funds (known as “SBICs”) that finance small businesses. https://www.sba.gov/sbic. Accessed 18 March 2016.
17 Established in the mid-1960s by the late entrepreneur and philanthropist Ewing Marion Kauffman, the Kauffman Foundation is based in Kansas City, Mo., and is among the largest private foundations in the United States with an asset base of approximately $2 billion. A primary focus of the Foundation is on entrepreneurship. http://www.kauffman.org/who-we-are. Accessed 12 October 2016.
18 Lundström and Stevenson (Citation2010) have made a concerted effort to divorce two entrepreneurship policy and small-business policy, principally by defining entrepreneurship as business starts. Policies that impact pre-starts, starts, and recent post-start are entrepreneurship policies and the remainder of policies impacting smaller firms is small business policy. The authors have conceptually achieved some success, but pragmatically policy-makers have neither the unlimited time frame nor the capacity to develop the coordinated individual activities that their entrepreneurship policy requires.
19 The two organizations ranked higher than NFIB that year were the AARP (American Association of Retired Persons) and AIPAC (American Israel Public Affairs Committee). The rankings in the late 1990s and first few years of the 2000s showed variation with NFIB ranking between second and fourth.
20 The small business agenda in the United States is economic in nature. It does not include social issues or foreign policy. As one noted small business lobbyist was fond of saying, “We don’t do busing, abortion, or gun control.”