Small Business Growth and the Economic Crisis- is growth a magic pill for the economy

Now this has been worrying me for a while it’s been one of those niggling thoughts at the

small business growth no magic answer for economic recovery

back of my mind. All this talk from politicians about small business growth and the economic crisis and how growth is the lynch pin of economic recovery. It seams to be global… this is how we are going to get the economy moving… Then I came across this article which has solidified my thoughts on small business growth and the economic crisis in as far as boosting the economy.

Small Business Growth and the economic crisis – is growth a magic pill for the economy

If there’s one thing Republicans and Democrats agree on, it’s that small business is the answer to what ails the economy. On these tiny bundles of entrepreneurial energy, they say, rides the nation’s hope for lower unemployment and faster economic growth.

But the work of several economists suggests that most small businesses are not particularly adept at creating jobs, at least not the best jobs. The work also suggests their role in generating national wealth has been exaggerated.

The problem is that not all small businesses are created equal. Businesses just getting off the ground contribute most of the country’s job growth, but older small businesses cut as many as they add.

Think Bill Gates and Paul Allen huddled together late nights developing Microsoft, not the corner liquor store.

“I don’t want to pick on dry cleaners and restaurants and small manufacturing firms, but they’re not a big source of job creation,” says John Haltiwanger, an economist at the University of Maryland.

Politicians like to say that small companies create two of every three jobs in a given year. That’s less impressive when you consider that almost all the 6 million companies in the U.S. — 99.9 percent of them — are small businesses, with fewer than 500 workers.

What’s more, two-out-of-three masks the fact that most small businesses eliminate more jobs than they create in a given year, either through layoffs, closings or bankruptcy……

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I agree with the writer, and it’s a world wide issue, another one of the small business issues that crosses over boarders. Do you agree? or do you consider that  small business growth is part of the answer to the economic crisis? Or do you like me see the cumulative effect of all small businesses en mass, just might not be the magic pill the politicians think it is. Is it the blue pill or the red pill?