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About The skanner. (Portland, Or.) 1975-2014 | View Entire Issue (April 20, 2011)
opinion Why Credit Access is Critical “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 © 2011 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 are part of a worldwide, 36,000- store network that produced $58.9 similar proportions. As influential financial analyst billion in sales in 2009. Small business franchises face Meredith Whitney observed last May, “Small businesses created 64 many of the same headaches as percent of new jobs over the past other small companies, but they 15 years, but they have cut five also potentially could catalyze job million jobs since the onset of this creation and the economic recov- credit crisis. Large businesses, by ery when America needs them comparison, have shed three mil- most. From 2001 to 2005, before the lion jobs in the past two years.” Like Whitney, the National 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 Great Recession began, franchised unable to grow their business, small businesses populated one of thereby restricting their ability to America’s most rapidly growing sectors. Their direct economic out- create jobs.” The Milken Institute’s put expanded by more than 40 per- Managing Economist, Kevin cent versus only 26 percent for Klowden, on March 21 lamented other businesses. In those years, “the bleakest hiring outlook since the franchising industry created jobs at more than three times the early 2008.” While the entire small-business rate of other non-franchised busi- sector gasps for credit — the oxy- ness segments. All told, more than gen of free enterprise — the situa- 825,000 franchise small business- tion is both troubling and promis- es in 300 different industrial sec- ing for franchisees. Essentially, tors yielded $2.1 trillion (with a T) these are small businesses that in direct and indirect economic output. Franchisees also created compose much larger companies. Consider 7-Eleven. Franchisees one of every eight non-farm, pri- run some 5,000 of the company’s vate-sector jobs in America. This solid record shows that, 6,100 U.S. outlets. They, in turn, with sufficient access to capital and a stable public-policy and reg- ulatory environment, franchised small business can be a job-creat- ing locomotive that pulls the rest of the economy forward. But, once again, the recurring problem is a lack of coal to shovel into that mighty engine’s boiler. In 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 Small businesses created 64 percent of new jobs over the past 15 years, but they have cut five million jobs since the onset of this credit crisis 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. 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. Why Are We told the rich Can’t Pay More? 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- page 4 The Portland Skanner April 20, 2011 e nteRpRiSe Riane Eisler & Rene Redwood site? 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 prenatal and child health care such as vaccines; abolished child labor; mandated not only primary, but ditures, the U.S. has higher child mortality, maternal mortality and poverty rates than any other devel- oped nation. According to a 2007 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. There is no evidence that lower taxes on corporations and millionaires ‘raise all boats’ 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- 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. By contrast, benefits to individuals, families, businesses and society at large from investment in human infra- structure will accrue for genera- tions. riane eisler is president of the Center for Partnership Studies, rene redwood is Ceo of redwood enterprise .
