The traditional yeomanry is losing out

Tuesday, January 18th, 2022

The working class may have suffered the most in the past decades, but the angriest class in America may be the small business and property-owning class, Joel Kotkin says:

National chains and online services are replacing many traditional Main Street businesses — the insurance and travel agencies, the local banks, the High Street retailers and restauranteurs. To make matters worse, local smallholders increasingly find themselves dependent on what analyst Mike Lind calls “toll booth” companies like Facebook, Google, and Amazon, tech megaliths which are able to coerce small businesses to give up their data. Amidst the supply chain crisis, firms like Amazon and the big box stores use their bargaining power to minimize delays in deliveries in ways not available to smaller businesses.

The traditional yeomanry — like the “kulaks” or wealthy peasants in Stalin’s day — is losing out. As executive compensation reached the stratosphere at the big tech and finance firms, small businesses faced what Harvard Business Review described as “an existential threat.” Experts are warning that one-third of small businesses, which comprise the majority of U.S. companies and employ nearly 50 percent of all workers, could ultimately shut down for good.

Perhaps, Arnold Kling suggests, we are now living in the New Servants economy:

Tyler Cowen has a series called “those new service-sector jobs.” My favorites include Coffin Whisperer and Wedding Hashtag Composer. The demand for such services can only come from people with excess wealth, and the supply comes from people who realize that their best source of income is to cater to those with excess wealth. This is very different from the age of mass consumption, when Henry Ford tried to manufacture cars that his workers could afford.

Actually, I think that the biggest engine of the trickle-down economy is the nonprofit sector. I don’t have data on this, but I suspect that if you ask the next 10 young professionals you meet where they work, at least 3 of them will reply that they work for nonprofits.

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I would much rather see billionaires invest in businesses in minority communities than fund nonprofits that donate to BLM.

Comments

  1. Sam J. says:

    A bit of info I have seen. The Hedge funds or other large funded entities are buying all the supply houses for materials, parts and supplies in the US. Think plumbing supply, electrical, air conditioning, etc. They have massive cash from their FED buddies so they buy ALL the supply houses. Subsequently, they suck afterwards. They database all the best selling stuff and only keep it; the rest you have to order.

    Before all the supply houses kept a lot of odds and ends to make sure that when you went there they would have “something” you could make work. No more. It’s all order it.

    And the employees hate it because they are changed from being guys who know how to get stuff for people to Walmart clerks that punch stuff into computers. Needless to say, with all the debt they pack on the company no one gets raises except the financial class.

    The financial class is hollowing out the whole economy and pocketing all the profits for themselves while piling all the debts on the formerly tax-paying profitable businesses, employees, and places they reside.

    The evil Romney did this to a paper company. There was a profitable paper company that made regular paper stuff in the US, envelopes and simple stuff. They used FED bucks to buy it then started wrenching as much profit and debt payments from the company as they could. No more pay raises, massive over work, same old story.

    They charged millions in “management fees” to the company. I’m sure their “management advice” to the managers consisted of, “pay us or we will fire you”.

    Of course a perfectly fine company that provided reasonable jobs for average people went broke after they gutted every ounce of profits from it they could.

    One reason Germany has had a high standard of living is they have a lot, or used to, of these little small companies that make a lot of regular stuff and get their financing from regional banks. This I think has been changing and they are ruining them also.

  2. Bomag says:

    “Before all the supply houses kept a lot of odds and ends to make sure that when you went there they would have ‘something’ you could make work. No more. It’s all order it.”

    This.

    Plus, the business model is more “sell a new product, don’t fix the old one”; thus fewer repair shops for harder to fix things with harder to get parts. Used to be many shade-tree repairs for cars and appliances; not so much anymore.

    Commodity agriculture is somewhat of a model: once, many small producers; now, a few large producers with exotic machinery. Supposedly, it frees the rest of us to do other, higher value things; but if every relevant human endeavor has been ag-ified, a bulk of the population is paid to just be quiet.

  3. Bob Sykes says:

    Our local not-for-profit hospital has bought up all (all) the private medical practices in the county. This appears to be a trend nationwide.

    My family doctor, once independent, now an employee says his life is better, no paperwork, no late Sunday night rotations.

  4. Gavin Longmuir says:

    Bomag: “Plus, the business model is more “sell a new product, don’t fix the old one”; thus fewer repair shops for harder to fix things with harder to get parts.”

    The only constant is change. There may be a future big opportunity in repair shops if — as expected — imports of new products from China increase in price and decline in volume as the US Dollar inevitably drops to a level that eliminates the unsustainable Trade Deficit.

    We could imagine a kind of kinder gentler scrap yard using abandoned shopping malls. People would bring in their non-functional toasters in part payment for restored toasters. Great opportunities for people with the tools and knowledge to scavenge working parts from failed appliances and piece together functional equipment.

  5. DJF says:

    “I would much rather see billionaires invest in businesses in minority communities than fund nonprofits that donate to BLM.”

    This comment is typical of Kling’s cluelessness. He’s clueless about both (1) the motives behind corporate donations to BLM and (2) the likely results of the business investment that he “would much rather see.”

  6. Adar says:

    “I would much rather see billionaires invest in businesses in minority communities than fund nonprofits that donate to BLM.”

    Not a bad idea. Just all the billionaires donate a minimum one-time $10 million to an endowment to give generous small business loads to minority communities.

    About 400 billionaires in the USA right now. Just do the math and that is a huge endowment.

  7. Bile Jones says:

    Pseudo-Chrysostom, thanks for the links. They really do focus on the problems. Do you have links to the original sources?

  8. Mike in Boston says:

    “Do you have links to the original sources?”

    They are from John Taylor Gatto’s Underground History of American Education.

  9. Contaminated NEET says:

    Gatto is great. Classroom education is evil.

  10. JAW3 says:

    Re non-profits, I accessed the Kellog Foundation page to see who they are being ultra libs and the management page is a bloated group of talkers, not doers. And the universities as non-profits should have to be regulated at least as tightly as corporations. IMO. They are all getting away with grand theft of value.

  11. VXXC says:

    Petit Bourgeois singing the Blues…

    The Most Important Man In History [hint, Charlie Chaplin moustache] had the middle class correct: selfish, useless, except to themselves. They cater to the Rich today; tomorrow they’ll be pimping their kids to the Rich. Essentially this class exists to give troublesome have a little will sell souls for more something to do, telling themselves they’re businessmen.

    As for the non-profits, that they are anything but isn’t news, either. So the petit bourgeoisie won’t be small businessmen; they’ll be in non-profit.

    C_ntZ all the way down.

  12. Jim says:

    Oy vey, Pseudo-Chrysostem is beginning to appreciate the capitalist menace…

  13. Steven JBC says:

    Actually Henry Ford didn’t originally raise wages so that his workers could afford automobiles; that would be self-defeating. He lowered costs by perfecting the assembly-line and adopting “Taylorization” of his workforce; but then had to pay his workers more because they hated the incessant never-ending routine of those assembly lines. There is something dehumanizing, almost robotic, in being the man who only installs the right-side door continuously. Eventually auto workers received the right to work “down-the-line”, rotating tasks to reduce the mind-numbing monotony.

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