Still others have added the wrinkle that it is not small firms that are the big job generators but new businesses. To be sure, some economists have come to similar conclusions, but many others have criticized them, finding significantly different results. The problem, of course, is that Birch’s findings simply don’t hold up. Years later, the sentiment is still being hammered into the American psyche by small-is-beautiful advocates and presidents on both sides of the aisle. Now a host of small business preferences, from tax breaks to regulatory exemptions to procurement favors, could be justified, not by the old-fashioned argument that small proprietors are the pillars of a democratic society but because small businesses are the most important job generators, the backbone of the economy.ĭespite Birch later admitting that his results were a “silly number” that he could change “at will by changing the starting point or the interval,” his claim has been endlessly repeated, like an urban myth, getting larger and larger, and even being garbled into claims that small business is responsible for all job creation. No longer could economists and policymakers simply assume that large corporations were the big job generators. This article is adapted from Robert Atkinson & Michael Lind’s book “ Big is Beautiful: Debunking the Myth of Small Business.”
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