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  1. Regulatory navigation and the expense of covering employee insurance makes it difficult to run a small business. In some cases it makes it almost impossible.

    I know liberals love to lament how big, mean Sam Walton killed the mom and pop stores, but I really believe it was government and not Walton who did the deed.

    Comment by Just Me — January 30, 2013 @ 8:03 am - January 30, 2013

  2. I suspect there might be two things going on. Chain stores probably have efficiencies of scale, bigger marketing budgets spread over more stores, more research on what consumers like, etc. But yes, it is also often argued that compliance is easier for larger companies. They have lawyers, HR departments, and so on. Charles Murray — maybe in his book “In Pursuit” — has argued that increasing complexity requiring verbal and paperwork skills benefits educated people — the sort of people who write regulations and get hired by big companies. Small business folks may be less likely to be college-educated and proficient at navigating bureaucracies.

    Comment by David Boaz — January 30, 2013 @ 8:32 am - January 30, 2013

  3. Government finds a small number of large businesses easier to control than a large number of small businesses. I don’t think the decline of small business is an unintended consequence of progressive politics.

    Comment by V the K — January 30, 2013 @ 8:39 am - January 30, 2013

  4. Bingo. Lefties whine about the disappearance of “Mom and Pop” stores – while being, via Big Government, the very cause of same.

    Comment by ILoveCapitalism — January 30, 2013 @ 9:36 am - January 30, 2013

  5. BTW, regulation (creating artificial ‘economies of scale’ via regulatory compliance costs) isn’t the only pathway here.

    As I once tried to explain, a second major pathway is the sheer scale of government spending, which sucks up economic resources that would otherwise be available to private businesses and help them survive. (Businesses experience it as higher input costs, tending to kill off the weaker/smaller of them.)

    Comment by ILoveCapitalism — January 30, 2013 @ 9:44 am - January 30, 2013

  6. You could also make the point that the government promotes the various agriculture subsidies as supporting the family farm when in reality it is mostly the big agri businesses that claim the bulk of the subsidies.

    Regulation tends to put small operators out of business.

    Comment by Just Me — January 30, 2013 @ 11:15 am - January 30, 2013

  7. All excellent points made so far. Plus, as was pointed out in the comments on Jeff’s thread about Hannan the other day, big corporations are among the sponsors and beneficiaries of big government. As soon as they become “too big to fail,” or as soon as they employ a large chunk of union workers, the politicians in Washington find it mutually beneficial to support them, even though doing so always puts smaller competitors at a disadvantage.

    Comment by Kurt — January 30, 2013 @ 11:35 am - January 30, 2013

  8. Kurt I loath the whole “to big to fail” concept.

    If they are too big to fail, then maybe we should consider the fact that they are just too big period.

    Also, there is much cronyism between big business and government (and this cronysim is common across party lines depending on the party in power) and unions are the definition of cronyism when it comes to democrats.

    Comment by Just Me — January 30, 2013 @ 11:55 am - January 30, 2013

  9. It´s not only the ¨mom and pop¨stores that are disappearing but even some chains probably for reason of declining sales of its products. Case in point. on my most recent return to L.A. I was surprised to see on the corner of of Sunset and Vine, that it was empty and there was a large notice in the window for a Walgrens to open at that site, which had been Border´s. I had a list of five books that I wanted to buy. I could only find two at Target. Before that I remember at that site used to be Wallich´s Music City, that sold musical instruments and records.

    Also, in 2008 I had to obtain some legal documents in Trenton, NJ. I walked from the State House to Center City and saw nothing but buildings that were either abandoned or had become state and local government offices. As I boarded a bus to go to the train station I asked the driver where did Trenton go? He said you´re in it. I told him that it´s all government offices or abandoned buildings. I was told I could find them in the malls on the outskirts. It is sad as to what is happening to our inner cities.

    Comment by Roberto — January 30, 2013 @ 1:23 pm - January 30, 2013

  10. “Independent Grocers Association” (IGA) was a reaction to chain supermarkets. It was an effort to duplicate the power of bulk purchasing to lower costs and lowering prices through creating “house brand” labels. But it failed, in part, because the big chains beat them in shipping and distribution costs.

    In the late fifties, people began moving to the suburbs and the shopping malls came into being. Now the shopping centers have all but killed the down towns.

    “Convenience” stores nearly always mean higher prices. The “convenience” is that they are nearby. Now CVS and Wallgreens are copying the grocery chains and becoming national convenience stores with a “pharmacy” hook.

    Mom and Pop stores are a service industry that does not pay except in hair care, restaurants, nails, bakeries, liquor stores, and niche boutique shops.

    All over the country are small towns that grew up as shipping and distribution points on the railroad. Now rail traffic is entirely changed and those towns no longer need the parts for their factories or to ship the finished product because the small factories are gone.

    Fred Allen had a line about a New England town that was so dull and boring that one day the tide went out and never came back. Well, all across America there are economies that have left and never come back.

    Government regulation has a lot to do with whether a small business can make it into the black ink.

    Small business failure rate:
    Year 1: 85%
    Year 2: 70%
    Year 3: 62%
    Year 4: 55%
    Slowly reducing to 35% failure rate after 10 years.

    Banks are not blind to the risk they are taking in helping to capitalize small businesses.

    It takes only a little time for the small business owner to realize that he is working his tail off for less than minimum wage. He can not create customers and he can not survive without a profit margin. If he has to pay employees, he has an automatic expense of 10%+ of the hourly wage of the employee which he has to pay the government or insurance funds by government decree.

    Franchises pretend to have a business plan that is relatively fail-safe. But the franchises that are relatively fail-safe like McDonald’s cost a million dollars or more a store to open and the franchisee has to have that money up front.

    So, when you look at all the small store spaces for lease, understand that the cost of attempting to make a living out of a store front is enormous. The fact is a person can make more money clerking at chain store than he is apt to make in the first five years from the profit margin in a small business.

    With welfare and unemployment insurance and minimum wage, a huge population has decided to not work and live off of government subsidies. Of course, they can do cash work and keep 100% of the income and many do.

    Comment by heliotrope — January 30, 2013 @ 1:24 pm - January 30, 2013

  11. “Main St” has become the pipeline that all the money passes through on it’s way to federal, state and city gubmints. “Main St” also does all the paperwork for free. I know of retail operations that are paying employees more than the owners are getting out of any profits. “Main St’s” decline has been going on for a long time but really accelerated since the early nineties. Unless you’re in a small business for about thirty years as I have been, you just don’t know what has been happening in this country.

    Comment by Richard Bell — January 30, 2013 @ 1:56 pm - January 30, 2013

  12. [...] Daniel Blatt at Gay Patriot has a very perceptive observation about how massive regulatory intrustion ostensibly on the side of the little guy actually has the result of helping the biggest corporations who are the only ones able to handle the onslaught, Big government means more chain stores: [...]

    Pingback by » Survival of the biggest brought to you by big government - Le·gal In·sur·rec·tion — January 30, 2013 @ 2:00 pm - January 30, 2013

  13. We need some people like this guy –

    – problem is, they need a killer British accent to really make points stick.

    Comment by Jonathan — January 30, 2013 @ 2:40 pm - January 30, 2013

  14. Put simply, Big can spread the cost of compliance over more revenue centers. So, one legal team can create policies for thousands of people to ignore at the same time.

    Comment by BigJ — January 30, 2013 @ 3:46 pm - January 30, 2013

  15. Unless you’re in a small business for about thirty years as I have been, you just don’t know what has been happening in this country.

    Nor do you know, as Richard Bell does, that “when you get there, you discover (learn) that there is no there, there.” (Gertrude Stein.) The small business is forever herding cats, navigating the rapids and working to stay ahead of the curve.

    My motto: “If it was easy, everybody would be doing it.”

    Comment by heliotrope — January 30, 2013 @ 6:51 pm - January 30, 2013

  16. There is less difference than many suppose between the ideal Socialist system, in which the big businesses are run by the State, and the present Capitalist system, in which the State is run by the big businesses.

    G. K. Chesterton

    Comment by Mark Noonan — January 30, 2013 @ 9:42 pm - January 30, 2013

  17. Another problem is that so many ardent liberals live in cloud cuckoo land, never listening to any voices outside their bubble.

    I’ve taken to actually asking those who bellyache about “big corporations” why they support political policies that favor them over the local independents they claim to support.

    Crickets. And befuddled looks.

    They have NO idea what I’m talking about. Rachel Maddow and Bill Moyers never told them about that, so it’s clearly not okay for them to think about it.

    Comment by Lori Heine — January 31, 2013 @ 2:02 pm - January 31, 2013

  18. Retail isn’t what it used to be.

    With an industry wide net profit margin of about 3.5%, it isn’t worth the stress.

    Especially when you can do so much more with your money, get a better return and deal with fewer people.

    I wouldn’t say it’s as much a big gov’t thing, as it is a race to the bottom thing. Retail is giving nickel and dime returns, when janitorial and trade related businesses are providing much greater ROI. Smart money is leaving retail.

    Comment by Andrew Medina — January 31, 2013 @ 6:20 pm - January 31, 2013

  19. There is less difference than many suppose between the ideal Socialist system, in which the big businesses are run by the State, and the present Capitalist system, in which the State is run by the big businesses.

    It’s not capitalist.

    Comment by Rattlesnake — January 31, 2013 @ 6:51 pm - January 31, 2013

  20. Chain stores probably have access to the Financial Guarantee Insurance Markets, where they could purchase Lease Guarantee Insurance to protect the landlord against default by the lessee (the chain store).

    Then the Financial Guarantee Company probably offloads the risk by selling bonds to Too-Big-To-Fail Banking institutions which then “hedge” their bets with Credit Default Swaps which they peddle to large pension funds and insurance companies – knowing that they are all Too-Big-To-Fail and thus the Feds will rush in to rescue them when the next Ponzi scheme starts to collapse.

    Or something like that . . . so in essence, yes it is a Big Government kind of thing.

    Comment by LizE — February 1, 2013 @ 4:37 pm - February 1, 2013

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