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About The skanner. (Portland, Or.) 1975-2014 | View Entire Issue (April 20, 2011)
opinion why Credit Access is Critical to recovery “Challenging People to Shape a Better future now” B ernie f oSter Founder/Publisher B oBBie d ore f oSter executive editor t ed B ankS advertising Manager J errY f oSter account executive L iSa L oving news editor B rian S tiMSon reporter d avid k idd graphic Designer M oniCa J. f oSter Seattle office Coordinator J uLie k eefe S uSan f ried Photographers The Skanner Newspaper, estab shed n October 975, s a week y pub ca- t on, pub shed each Wednesday by IMM Pub cat ons Inc , 4 5 N K ngsworth St , P O Box 5455, Port and, OR 97228 Te ephone (503) 285-5555 E-ma : info@theskanner.com Wor d W de Web s te: http://www.theskanner.com Fax: (503) 285-2900 the Skanner s a member of the Nat ona Newspaper Pub shers Assoc at on and West Coast B ack Pub - shers Assoc at on A photos subm tted become the prope ty of the Skanner We are not re - spon s b e for ost or damaged photos e ther so c ted or unso c ted © 2010 the Skanner A R GH S R S RV D R PRODUC ON N WHO OR N PAR W HOU P RM SS ON PROH B D knowing What’s important Can Change Your Life! Subscribe to The Skanner – don’t miss an issue! Please sign me up for: q 1 year $74 q 2 year $140 q New Subscription q Renewal name _________________ address _________________ City _________________ State ______ ZiP ________ Phone Mail with check or money order to: The Skanner P.O. Box 5455 Portland, OR 97228 M ost Americans under- stand that small business- i nternationaL f ranCHiSe es — not massive corpo- rations — generate most new U.S. Steve Caldeira & Chad Moutray jobs. And when these enterprises hurt, they likewise lose jobs in billion in sales in 2009. From 2001 to 2005, before the similar proportions. As influential financial analyst Great Recession began, franchised Meredith Whitney observed last small businesses populated one of May, “Small businesses created 64 America’s most rapidly growing percent of new jobs over the past sectors. Their direct economic out- 15 years, but they have cut five put expanded by more than 40 per- million jobs since the onset of this cent versus only 26 percent for credit crisis. Large businesses, by other businesses. In those years, comparison, have shed three mil- the franchising industry created jobs at more than three times the lion jobs in the past two years.” Like Whitney, the National rate of other non-franchised busi- Small Business Association believes the situation is dire. NSBA’s 2010 Year-End Economic Report found that “fully one-third (36 percent) — which translates into more than 10 million — of the nation’s small businesses are not able to get adequate financing.” Consequently, the NSBA added, “small-business owners continue to be financially stymied and ness segments. All told, more than unable to grow their business, 825,000 franchise small business- thereby restricting their ability to es in 300 different industrial sec- tors yielded $2.1 trillion (with a T) create jobs.” The Milken Institute’s in direct and indirect economic Managing Economist, Kevin output. Franchisees also created Klowden, on March 21 lamented one of every eight non-farm, pri- “the bleakest hiring outlook since vate-sector jobs in America. This solid record shows that, early 2008.” with sufficient access to capital While the entire small-business sector gasps for credit — the oxy- and a stable public-policy and reg- gen of free enterprise — the situa- ulatory environment, franchised tion is both troubling and promis- small business can be a job-creat- ing locomotive that pulls the rest ing for franchisees. Consider 7-Eleven. Franchisees of the economy forward. But, once again, the recurring run some 5,000 of the company’s 6,100 U.S. outlets. They, in turn, problem is a lack of coal to shovel are part of a worldwide, 36,000- into that mighty engine’s boiler. In store network that produced $58.9 a recent survey, fully 55 percent of the International Franchise Association’s members called themselves “moderately” or “sig- nificantly” affected by tight credit. This stunts their growth. While 2011’s stronger overall economic outlook encourages franchisors and franchisees, a lingering lack of credit sinks their spirits and smothers a broader recovery. For their part, lenders have their own cows on the tracks. Banks face sharp declines in the value of their borrowers’ collateral. A much more rigid regulatory environment has bankers looking over their shoulders like never before. ... the recurring problem is a lack of coal to shovel into that mighty engine’s boiler Meanwhile, the unemployment rate has hovered near 10 percent, limiting the income that the job- less otherwise would deposit in banks and lowering their demand for lucrative banking services. Many banks’ business customers have watched sales volumes slide, forcing them to live with lower profits, if any. The Obama Administration, to its credit, recognizes the impor- tance of credit for small firms. Thus, Small Business Administration chief Karen Mills has worked to raise federal guar- antees on SBA loans to 90 percent. She has reduced or eliminated fees on such loans and lifted the maxi- mum amount that a business may borrow from $2 million to $5 mil- lion. Meanwhile, the U.S. Treasury has shown a flash of cre- ativity with a new plan to spur state-level lending to small busi- nesses. To find even more solutions to these problems, the International Franchise Association, in coopera- tion with the National Association of Government Guaranteed Lenders, the Consumer Bankers Association, the National Restaurant Association, and other leaders from the financial and small business communities recently convened at a Small Business Lending Summit in Washington, D.C. Participants — including entre- preneurs, financiers, and regula- tors — discussed the establish- ment of a franchise registry that would streamline loan approvals and provide a pipeline of qualified borrowers, eager to be financed. All of us - including franchisees, franchisors, lenders, policymak- ers, and taxpayers - have a stake in igniting the economy by giving entrepreneurs the tools to create jobs and grow. Small business franchising can contribute the missing spark. Steve Caldeira is the president and Ceo of the international Franchise association (iFa). Chad Moutray, a former chief economist of the u.S. Small Business administration’s office of advocacy, serves as a senior advisor to the iFa. Human Deficit looms in wake of Budget-Cuts A financial debt can be paid back. But the debt we’ll owe our children if invest- ments in health, nutrition and edu- cation are slashed is irreparable. Investment in human infrastruc- ture – providing the human capac- ity development for optimal eco- nomic productivity and innovation through both government and business investments – is essential for success in the post-industrial economy, and this should be our policymakers’ guiding economic principle. It’s up to us to ask the hard ques- tions: Why are we being told we can’t raise taxes on the rich, but must cut wages for teachers, nurs- es, child-care workers and others on whom our future depends? There is no evidence that lower taxes on corporations and million- aires “raise all boats,” or that mas- sive cuts in social services have ever helped people in developing nations rise from poverty. The opposite is true. It is countries like Canada, Sweden, New Zealand and Finland that have made com- mitments to caring for future gen- erations that have risen from poverty to prosperity. And today nations such as Brazil, South Korea, and other “emerging advanced economies” are heavily investing in their people. Why are we told that cutting social programs is the road to prosperity, when our past prosper- ity was the result of the very oppo- site? Page 4 The Seattle Skanner april 20, 2011 e nterPriSe Riane Eisler & Rene Redwood At the beginning of the 20th cen- tury, the United States was what we today call a “developing coun- try.” Except for the super-rich, our general living standard was abysmal: child and general mortal- ity rates were extremely high, as was poverty. Then we invested in UNICEF study, the U.S. ranked 24th of 25 developed countries with children living below the national poverty level. By compar- ison, the Netherlands, Sweden, Denmark, Finland and Spain topped the list. The U.S. Census Bureau estimates that poverty afflicts roughly one in six American children—some 13 mil- lion youths, a figure that’s expect- ed to rise as poverty trends contin- ue to soar. ‘Our priorities should be exactly what the ‘deficit hawks’ are putting on the chopping block’ prenatal and child health care such as vaccines; abolished child labor; mandated not only primary, but also secondary public education; and promoted college education through the GI Bill for returning soldiers. These kinds of govern- ment expenditures, along with Social Security, Medicare, Head Start and other government pro- grams to care for and educate our people had a huge return on investment for our people and nation. Today, largely as a result of retrenching in such public expen- ditures, the U.S. has higher child mortality, maternal mortality and poverty rates than any other devel- oped nation. According to a 2007 In 2009, more than 4.4 million single mothers earned wages below the national poverty level and were barely able to supply their children with basic needs. That number of women had increased 6.7 percent compared to the previous year, according to census figures. The kinds of cuts now proposed — especially cuts to programs to help impoverished families with children — will push us down even further. By contrast, investing in educa- tion, health care, child-care and eldercare drastically reduces unemployment, poverty, public assistance, spending on prisons — and at the same time provides a trained work force and higher tax base. According to a recent NBC/Wall Street Journal poll, 37 percent of Americans believe job creation/economic growth is our nation’s No. 1 issue, and only 22 percent named the deficit/govern- ment spending as the top. What’s more, while Americans find some budget cuts acceptable; they adamantly oppose cuts in Medicaid, Medicare, Social Security and K-12 education. That’s because most of us know that our most important assets are our people. If we don’t invest in human infrastructure, we cannot be economically successful. We urgently need a realistic long-term perspective on how national and state deficits are cal- culated. The human capital deficit created by cutting social programs will be irreparable. There’s an old saying that an ounce of prevention is worth a pound of cure. Our priorities should be exactly what the “deficit hawks” are putting on the chop- ping block. Cutting those pro- grams is criminal behavior, not sound policy. riane eisler is president of the Center for Partnership Studies (www.partnershipway.org) and author of the real wealth of nations and the Chalice & the Blade. rene redwood is Ceo of redwood enterprise in washington, D.C. (www.redwood- enterprise.com).
