How Main Street Capitalism can help grow small business. (a review of "The Great Equalizer" by David Smick)

I recently attended an interesting conference call hosted by the Small Business & Entrepreneurship Council on Mr. David Smick's new book The Great Equalizer. I Joined in on the call being a small business profession for the government it was quite interesting to hear how the small business community has experienced changes in the past years and how we can reinvigorate main street capitalism in America. After reading the book along with my notes from the meaning and applying my own knowledge of how the government assists small businesses I learned a great deal about how the US economy could be improved through main street capitalism and how the small business advisory community and the SBA could play a role. The book discusses how the main street start up business environment has changed over the last 20 years. Being in my professional position I can say there is definitely some validity to this as many areas of the country have had trouble attracting the so called tech industry which seems to encompass more and more industries. It talks about how start ups currently have been only happening in bubbles such as San Francisco and New York. It compares some of the broad strokes going on in the global banking industry are similar to the 1930's which is very true and apparent. I just finished reading "The Bankers Who Broke the World" and there are many similarities you can find presented in the book and our current economic environment. The book's main focus is how to get the american engine of innovation churning again and move away from the misconception of economic mediocrity to true economic growth. The experts seem to be giving up on seeing an economic rebound to the likes of Harding and Coolidge or Roosevelt mid way through his term, or JFK, or Reagan and even Bill Clinton where the economy has an energy it just doesn't seem to have today even though the elements are still there we just need something to make it all come together as Americans are not ones to go down without a fight.

In this review I will go into what I think of the book. The book begins by discussing how the dynamics have changed and some people have never seen a booming economy that really helps everyone improve. This can have drastic consequences which we see in today's world such as with retirements being more and more tied to the stock market if it stops growing we will have a retirement crises at some point. Also we could face a lost generation problem the likes of Japan. One of the biggest problems it sites however is the declining of the middle class and loss of main street capitalist who want to start businesses and spur industry. I am a millennial and my generation is one he sights as growing up in this environment and the consequences it has had. I know many people who look at the stock market simply as a casino and yet most of them are tied to it through a 401K plan but wouldn't event consider investing in a stock due to fear of risk. It is similar with people starting businesses fear of failure is more prevalent as funding is hard to find and many young people are riddled with debt they don't know how to pay off. Venture capitalism has seen some weakness in recent years and even though crowd funding is starting to gain some ground it is still not widely considered for companies due to risk return ratios.

The book gives a very good description of the different forms of economies for the average person to consider and discusses the issues around predictions. Often times people and businesses go by economist opinions on the world to determine the financial plans in today's ever changing world which are often wrong. It discusses a confidence game politicians and economists play when reporting their views which are often rosier that reality and forget to look into micro aspects as well as macro aspects. For example there were many people who saw the 2008 crash coming. I distinctly remember my uncle in real estate in late 2006 early 2007 talking about a weakening market. You could also hear it in some the investing world. 2 perfect examples of the unexpected happening can be seen in "The Big Short" or "The Confidence Game how a hedge fund manager called wall streets bluff". Both of these detail how a contrarian view may be disliked but should be considered as it can often provide knowledge when trying to predict the future. With the ever changing economy and the bigger the picture that has become more visible to the average person the question of predictability has become what do we do as a society and how to we ensure the benefits are widespread vs confined to the top.

The book suggest a method called bottom up innovation which sounds likes a great idea; however there is a communication challenge of getting the top to even listen to the bottom and allow them a way in. By a way in I mean a way to take part in the wide spread success. In today's world it is not uncommon for a company to go through 5 or more founds of VC funding before publicly listing causing the major benefits to only be enjoyed by the more affluent investors as many regulation prevent average people from investing in non-public companies. This can be seen in the fledgling crowdfunding debates going on and comparisons of how accredited investors are determined and if it should be by income or skill and knowledge. The book discusses how the government measures the economy and some of the flaws. Based on the reading along with my sense of the government it made me wonder if perhaps some for the measures of economic success should be different instead of focusing on how much government funds are allocated to small business through government contracts or the U-3 (the main unemployment index number) maybe the government should focus on how the industrial base is changing and what types of new jobs are being created and where skilled employees are needed a lot of this data could be used to restructure the core curriculum in schools and improve the changes for young people to have solid careers.

Anyway I don't want to give away the whole book but it is an interesting read with some great information for society to consider in forming where we as America want to go as a country and the position we want to have in the world.