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The Mamas and Papas

September 14, 2010

I’m still scratching my head about this article from Newsweek. But then again, it’s Newsweek, so we should not really take it seriously.

I haven’t read the article, but I’m surprised the “study’s” authors concluded that mom-and-pop stores are a drain on the economy. If we nurture big business as John Haltiwanger suggests, then where will all the new work come from?

In her book, The Economy of Cities, Jane Jacobs argued that cities with lots of new work flourish more than cities that lacked it. Not surprisingly, large companies, such as the big businesses, are not very good at creating new work. It is the smaller companies that are innovative and are good at creating new work from old work.

As you may recall, new work is good for economic growth due to import replacement. Local economies prosper because local consumption and employment increase leading to dramatic growth. So instead of nurturing the big boys, let’s focus on the little guys. They, after all, may be the ones who can get us out of this economic funk.

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