Wednesday, December 16, 2015

Six Million Businesses and Shrinking

There are only 6 million active businesses in America.  Another 20 million are in name only according to Gallup.

They report that “Of the 6 million, 3.8 million have four or fewer employees,” otherwise known as micro businesses.

According to another study, most micro businesses never want to grow to more than 10 employees, which would place them among the one million businesses today with between 5 to 9 employees.

That means there are “only 2 million small, medium and large businesses in the United States,” including about 1,000 companies in the “big business” category with 10,000 or more employees.

For sources of “dark money” and undue, often opaque influence among lawmakers look to the larger employers, something shown in an investigative piece just re-published in Pacific Standard.

For job creation, however, look to those first two groups, especially micro businesses.

So how do we foster more of these concerns that generate the vast majority of new jobs?

Buy local, obviously.

Some experts point to enforcing regulations evenly along with simplifying some.  Most, however, point to making credit more available.

The rub is that over the last 15 years, small business loan volume is down 14% and loans made to micro businesses are down a third.

What happened?  One indication is that since 2008 alone, one in four “local banks” have simply vanished.

When I graduated from high school in 1966, more than 7 out of every 10 banks were small, single-office local banks, totally more than 10,000 nationwide.

Branch banking had become the norm by the time I moved to Durham, NC in 1989.

Today, there are half as many commercial banks overall as there were when I graduated from college in 1972 and fewer than 1,000 single-office or truly local banks in the entire country.

Even so, small banks and credit unions make most of the loans to small businesses, including micro businesses.  There are just fewer and fewer of them.

Contrary to lobbyists, the decline of small, local banks isn’t due to regulatory reform after the great recession.  Click here to download an excellent review of the reasons.

Far more compelling is that this problem began with policy changes more than a decade earlier.

In 1995, small banks and credit unions held 27% of bank market share compared to the 17% held by giant banks.

Today, giant banks control 59% of bank market share, more than five times as much as small banks and credit unions, and just four mega banks control most of that.

Now, the four largest banks alone control 42% of all banking, yet they make a very small share of loans to job creating local businesses.  Nor do they play nice with one another.

These four mega-banks alone control nearly four times the amount of banking as all of the remaining small banks and credit unions put together.

In the four years leading up to the great recession about 300 commercial banks disappeared each year but we were creating nearly half as many.

The vanish-rate continues, but we’re creating only 6 new banks a year on average according to the Institute for Local Self-Reliance, the source delving into much of these data.

Good policies and lending by small - usually stand-alone local banks -fueled the growth of America’s middle class in the 1960s and 1970s before anti-government rhetoric and deregulation began to hollow it out.

It is likely no coincidence that today this powerful segment of households is rapidly shrinking or that the deaths of businesses now outnumbers the births of new businesses.

As a moderate Independent, fiscally and socially, I find analysis intriguing that shows that nine out of the last ten recessions occurred under Republican presidents while Democratic presidents created nearly twice as many jobs per year.

Of course, this illustrates how intricate and complex economic development is but that the underlying principles always come back to main street as well as the political courage to resist powerful special interests.

It is also ironic that conservative states such as North Carolina where I live regulate cities and local governments from practicing the most basic tenant of economic development – buying local.

Monday, December 07, 2015

This Ongoing War 150 Years Later

In North Carolina, it’s no surprise to learn that “since 1960, one third of the world’s arable land has been lost to erosion.”  Nor, according to scientists, that “46-58 thousand square miles of forest are lost each year – equivalent to 36 football fields every minute.”

Tar Heels have witnessed the link between depleted soils and deforestation in the decades before the Civil War when more than a third of North Carolinians moved away.

By 1850, 31% of native North Carolinians then living in the United States resided in some other state.

Backwardness regarding slavery and race relations as well as resistance to public education and infrastructure played a big role in the out migration as did poor land use practices by plantations.

It’s well documented by unapologetic historians such as the late Dr. William S. Powell.

I’ve been reading or rereading two others recently, one written the year I was born (1948) entitled From Slavery to Freedom and another just released entitled, The Old North State at War: The North Carolina Civil War Atlas.

Both shed new light.

The latter shows the population breakdown by race and freedom-status broken down by county just prior to the Civil War, as well as the vote by county for or against succession.

You can see a divide back then running down between what is now Durham and Wake/Raleigh with 5 points more slave-holders in Wake.

Wake/Raleigh also had twice the number of slaves as Durham/Orange and nearly three times the number of free Blacks out of 30,463 statewide.

There were a little more than 125,000 households in North Carolina in 1860 and 28.2% owned slaves.

Yet in 1861, Durham/Orange voted by more than 3 to 1 against succession from the Union while Wake/Raleigh voted for it by a few hundred votes.

As the rhetoric heated, the state as a whole was almost evenly split on the issue with a slight nod against.  People’s minds back then were more focused on the wealthy paying more in taxes here.

Within weeks though, secessionists won out both because of a general sentiment of “you can’t tell us what to do” and being surrounded by states that had or were succeeding.

The North won the Civil War that resulted, which effectively ended with a surrender in Durham.  Thanks to resistance by Southern Generals Lee and Johnston there wasn’t the subsequent guerilla war Southern leaders wanted.

But that didn’t mean war was over.

Another war erupted almost immediately between Democrats who were controlled by white supremacists and Republicans.

Just as a small percentage of the population had monopolized power in North Carolina and kept it backward, then pushed it into a war to defend slavery as a way of life for a few, a similarly small percentage held power in this follow up war.

Political rhetoric is powerful as we still see today.  It can close minds more easily than open them, something given comprehensive coverage a few days ago in an On the Media radio show entitled Lies, Lies, Lies.  

Republicans lost this follow up war and soon became all but extinct across the South because the party had became divided into an increasingly conflict-weary faction seeking social justice leading to a takeover by its Wall Street wing.

Just as Democrats had become divided into factions over slavery leading up to the Civil War, resulting in President Lincoln’s election, factionalized Republicans lost the follow up-struggle.

Following the South’s defeat and preservation of the Union in the Civil War, reunited Democrats fell sway to the rhetoric of a small fraction of white supremacists who this time sought not only to reinstate limitations on civil liberties, but to virtually annihilate the Republican Party in the South, which they did.

As a result, civil rights in the reunified country were put on hold for another hundred years and even today, seem lodged between ongoing institutionalized bias on one hand and a futile obsession with effacing racist symbols on the other.

The two political parties have switched roles today.

It began gradually in the decades leading up to the 1930s on issues of social and environmental justice, then became increasingly apparent after WWII and symbolized by the 1960s.

As someone who was raised a staunch Republican which I remained until nearly 25, I have been particularly interested in the history of the Republican and Democratic parties.

My Republican roots go back to the party’s founding.  But many of those ancestors would no longer be welcome there.  People who sense I lean Progressive probably don’t realize that it is the Republican Party that has shifted.

Understanding how the parties have evolved helps me understand how I briefly moved to the left in my mid-20s before finding my comfort zone as an Independent except wherever forced to briefly sign up so I could vote in primaries.

Today it is Republican ideology that seems to view everything as a threat to way of life, dominated by a few who seem to want to annihilate not only Democrats but anyone who dares to be moderate.

We see it in the refusal to negotiate or reach bipartisan agreement, even when Democrats sign on to Republican-generated innovations such as carbon credits or healthcare overhaul using exchanges that emulate the requirement for car insurance.

Further evidence is research showing that the root of Republican opposition to addressing climate change is the knee-jerk stereotyping of anyone concerned about the environment as a “watermelon,” green on the outside, red (as in Commie for you Millennials) on the outside.

The one thing that remains constant is that just as a tiny minority held North Carolina back after the U.S. was founded and the Civil War was fought to preserve the way of life lived by only 28% of Tar Heels, policies here are still driven by a small percentage in power.

The only thing certain is that the pendulum will swing yet again, but not the problem.

The parties may reverse roles yet again one day and apologists, as always, will try to smooth everything over like propagandists did between 1866 and 1966 by transforming the issue of slavery into “states’ rights.”

Democracy truly exists only when a majority of people vote, not just when the vote is a majority of those showing up.   Maybe similar to governing boards, popular elections should be valid only when there is a quorum?

As a moderate Independent who more and more has a little “time on him” as they say in my native Idaho, I am more and more aware of the dangers of failing to admit to myths when in pursuit of greatness as a nation or perpetuating a way of life.

I know far too many reasonable Republicans and far too many crazy Democrats to believe the rhetoric when one or the other party gives in to zero sum thinking.

But as President George Washington lamented in 1795, the problem may be in the nature of political parties, meant as a means to help people make decisions but then used as a reason not to think:

“However [political parties] may now and then answer popular ends, they are likely in the course of time and things, to become potent engines, by which cunning, ambitious, and unprincipled men will be enabled to subvert the power of the people and to usurp for themselves the reins of government, destroying afterwards the very engines which have lifted them to unjust dominion.”

Lament indeed!

Thursday, December 03, 2015

An Action Plan for Green Infrastructure

Once again, the U.S. Forest Service and its stakeholders such as the National Urban and Community Forestry Advisory Council have clarified something a few otherwise forward-thinking communities still don’t get.

A community’s urban forest includes “all trees in the city, on public and private property,” including homeowners’ yards as well as school and corporate campuses, 3.8 billion trees overall in America.

The ten year action plan issued several weeks ago includes progress made over the previous ten years as well as overarching principles, metrics, goals, strategies and steps to guide urban forestry efforts through 2026. It also includes strategies at the local level.

Management of an urban forest begins with a plan predicated on a comprehensive community wide inventory and assessment.  Many communities, such as the one in North Carolina where I have lived for more than a quarter century, have neither.

But across the South now, 649 communities have management plans, an increase of 43% in the past decade compared to 70% nationwide.

Still, less than half of Americans (47%) live in communities that have programs to plant, protect and maintain their urban forests. More than 40% feel much more needs to be done.

The report is “must reading” for people who care about their communities and should be required for anyone holding or running for elected office.

The report provides supporting metrics useful for public information and that will lessen the tendency of some to either dismiss trees merely as just “nice to have” or those who ironically knee jerk about anything environmental as a threat to their way of life.

One cannot read this report without gleaning that a community’s trees and vegetation are indeed important infrastructure.