
We Can All Become Job Creators - kennyma
http://www.nytimes.com/2011/10/18/opinion/nocera-we-can-all-become-job-creators.html
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hugh3
We need to stop talking about "job creation" and start talking about "wealth
creation". It's easy to create _jobs_ \-- e.g. I can go round breaking windows
with rocks and create jobs for glaziers. But creating jobs that create wealth
-- that is, to create an opportunity for someone else to join their labour
with my capital in order to build something that someone wishes to pay for,
thus enriching all three of us... well, that's trickier.

For existing small businesses, though, I'm wondering to what extent easier
access to credit is really the answer. Are there that many small businesses
out there right now saying "ohhh, we could be making so much more money if we
hired someone, but we need to borrow money in order to hire them"? Some,
surely, but many?

The main reason businesses aren't hiring is that they're not convinced that
putting extra people on staff will actually be profitable.

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pitdesi
Easier access to credit is a huge detriment to small businesses, in ways that
we (startup-folks) don't think about... One example - the typical small
business restaurant. It is a VERY different businesses than the startups that
we create. You can't create a restaurant without any money, for example... You
can bootstrap an online business by not paying yourself, but when you have to
pay for a building and kitchen etc, things are much tougher.

Programs like this that leverage your dollars effectively are pretty useful -
there are lot of people out there who want to start small businesses or hire
someone seasonally etc that are just in a cash crunch... You have to hire
someone before you get paid for their efforts, and you can't offer them
equity.

What they're doing (in my understanding) is eliminating the default risk for
lenders, so they are able to leverage the dollars 1 to 7. This is also common
in the microfinance field. It makes a lot of sense. Also, SBUX is the best
place I can think of to market this. I'm in line paying $5 for a coffee... can
I give a dollar for small business? hell yeah. A question arises in my mind
though, shouldn't I just pay $4 for a coffee at an actual small business?

We made an infographic on small business lending... it isn't our best, but it
does have some useful stats (TL;DR - credit is a big problem for small
businesses and loans are really hard to get):
[http://feefighters.com/blog/ff_infographic/the-truth-
about-s...](http://feefighters.com/blog/ff_infographic/the-truth-about-small-
business-lending/)

~~~
wisty
Restaurants can be bootstrapped. A mobile vending unit costs ~20k. Add an
extra 10k of permits, and basic inventory, and you could sell coffee somewhere
near a transport hub. From there, you could add a few food items, build up
savings, then lease a small restaurant.

The problem is, regulators can be _very_ unfriendly to mobile vendors.

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Goladus
Restaurants can be bootstrapped for some limited values of "restaurant" and
"bootstrap." You can also steer a car with your feet, but hands are a lot more
effective.

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jallmann
Correct me if I'm wrong, but this seems like a way to tug at people's
heartstrings for free capital. If interest goes back to the original investors
(donors), surely Starbucks is not going to track down everyone who contributed
a dollar for their $1.05 back.

Someone is going to profit handsomely from this, unless all the proceeds are
reinvested into other loans.

~~~
rhubarbquid
Yeah, I have the same concern. "Americans themselves would start lending to
small businesses" and " Starbucks customers would be able to donate money to
the effort when they bought their coffee." don't really agree with each other.
Donating isn't lending.

On the other hand, lending isn't a sure thing. We might be talking about
people getting their $0 back from their $1 investment if the borrower
defaults.

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jen123
I've seen some small businesses go under because they haven't been paid on
time. They borrow capital to pay their employees until their customer gets
around to paying them...This especially occurs if the customer is big and the
business that is servicing them is small.

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jroseattle
Ditto. Saw this happen with a small local company that was given prime
placement in WalMart -- and had to up their production by about 10000%. It
wiped them out.

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rhizome
Google "monopsony."

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mfringel
The term "Job Creator" is a clever-as-in-clever-bastard way of re-framing the
discussion. "Job Creators" become their own privileged class of people who
have the secret knowledge of how to Create Jobs. Also, the term "Creator"
implies a certain deity-like status, as if only they have the power to create
jobs from the void.

I much prefer "employer."

~~~
rhubarbquid
or "lender" in the context of this article.

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FD3SA
Unfortunately, the issue is not so simple. The the labor market is under
assault from every front. Illegal immigration and offshoring depress skilled
labor wages, while at the same time robotics and software progress to automate
as many skilled jobs as possible. Laborers turn to college degrees, which
burden them with massive student loans, only to graduate with unimproved
employment prospects due to the saturation of the market with higher ed
degrees. Meanwhile, businesses have strong incentive to replace labor (human)
with capital(machine), as the latter is far cheaper and does not require
health insurance, benefits, or pension plans. This also helps businesses
improve profit margins significantly.

Thus, we have our scenario: corporate profitability increasing in tandem with
structural unemployment. Consolidation of capital to a few major winners, and
debt and unemployment for the losers.

There are few ways out of this mess, and none of them can occur with "business
as usual" policies.

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hugh3
Maybe, but let's be realistic. We're talking about 9% unemployment rather than
a "full employment" value of 5%. The US economy is perfectly capable of
finding productive work for another fifteen million people, just like it was
three years ago, and eventually will be again.

People have been predicting the end of work ever since the first mechanized...
whatever. In the past 150 years, we've managed to mechanize the hell out of
agriculture _and_ manufacturing _and_ we've hugely increased labour force
participation by encouraging women to work. And yet, at every point along the
road, unemployment rates always seem to stabilize at about 5% in good times,
and shoot up to 10% in bad times (Great Depression excepted, but that was due
to some zany government interference).

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teyc
ReceivablesExchange (mixergy interview) solves the problem of cashflow by
securitizing invoices, and having institutions bid for them. It is an
interesting practice because it is less labour intensive than traditional
factorization, and is better at spreading risk.

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dkrich
I love the idea. Mainly because one of the biggest problems in our country
(the US) right now is a complete breakdown in consumer confidence. People with
money are sitting on it, afraid to spend or invest because they are afraid at
any moment that the bottom could fall out.

Getting people to invest in micro-amounts at a large scale could unlock a lot
of credit for small businesses that could use it to grow. I don't necessarily
think that it is going to turn the economy around, but thanks to Howard
Schultz for making a concerted effort to do what he can to help.

~~~
dkrich
I also think that it is an incredible marketing opportunity for Starbucks. For
$5 million, they (rightly so) are viewed as patriots, and people (myself
included) feel compelled to support them over their competitors.

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redwood
Interesting, glad to see, at the very least, a bit of patriotism returning to
the idea of jobs. In big companies the push to outsource is strong and
political correctness prevents much dissent.

Would still like to see a government regulation help as well: e.g. perhaps
companies with more employees per profit would have a tax incentive and
companies with fewer employees per profit would have a penalty. This way you
essentially pass on 'unemployment' payments to companies rather than giving
handouts from the government. Presumably companies would thus at least try to
use the labor they were being required to hire. I know this sounds a bit like
central planning, but doggonit' as we approach an era where we can survive
with few in work due to machine help, we may need to regulate in a form of
wealth redistribution. Quite frankly I'd rather see it done through companies
than through the government directly. Of course the fact that I don't think
the government today can manage a new deal type program is probably also a
sign that the government won't be able to pass anything like this to begin
with.

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redthrowaway
>perhaps companies with more employees per profit would have a tax incentive
and companies with fewer employees per profit would have a penalty.

That would be terrible. You'd be penalizing the Googles and Apples of the
world, who create _good_ jobs, and rewarding the Walmarts, who create shitty
ones.

~~~
OstiaAntica
Agreed. Our friend is afraid of a problem that has never existed in history. A
society that is increasing in productivity and wealth just creates new types
of employment opportunities, not unemployment.

