I cant help thinking that our Federal Government has had a large hand in putting Main Street in peril. Its a long road, and not intentional, but it goes like this: Ours is a Free Market economy. Businesses can open and close, and compete for the attention and cash of consumers. As our nations population expanded within the confines of our national boundaries, generations of citizens opened businesses to serve local patrons. From hardware and lumber stores to grocery stores, diners, bars, gas stations, car dealerships...... businesses expanded where the population landed. Once our national infrastructure became capable of large-scale, fast and reliable transportation for goods and information, it became possible for some of those businesses to expand beyond the obvious reach of their ownership...to nearby towns, other states, or even faraway cities. Due to economies of scale, larger businesses have been able to use the same corporate overhead and bulk purchasing to lower the per-unit price of the goods that they sell, even after factoring in some transportation costs (in many cases the transportation costs for the local dealer are the same as the bigger regional player, in some cases the Big Guys have negotiated a lower price for the service based on a volume discount). Heres where I believe weve gone sideways, though. At some point, our Government has encouraged, even rewarded (with significant tax discounts) each of us to invest in those Big Guys. We have 401k and Roth IRA plans that give us tax breaks for investing in the stock market, where the Big Guys sell tiny pieces of their respective companies and acquire capital to expand their business (an oversimplification, I know). I would give a more obvious explanation in this way: If I invest my 401k or IRA funds in Best Buy stock, any earnings are tax-deferred. If I invest the same funds in the local AV guys, or my own business, my earnings are taxed annually. And they are taxed again when I sell the business or my shares. As a result, these Big Guys have tapped into very large amounts of capital (from you and me) to expand into our local markets and compete with your friends and neighbors and their respective businesses. We lament the loss of Mom and Pop shops, all the while investing in retirement accounts (or even playing the market) that put those same shops in peril. The deck seems stacked. I know there are many of us who go out of our way to shop locally and to patronize those small businesses. But it seems to me the deck is stacked against them. What do you think?
Posted on: Sun, 06 Apr 2014 16:32:03 +0000
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