This Saturday, November 27, is so-called Small Business Saturday, sponsored by American Express. Specifically, the credit card giant is offering card users a $25 credit to their account if they pre-register their cards on facebook.com/smallbusinesssaturday.com and make a purchase of at least $25 at a locally owned, brick-and-mortar retailer this Saturday. This might seem like a big financial institution's sneaky attempt to infiltrate and ally itself with the local business, local bank movement. Boy, I hope so. After all, big banks needn't be anathema to small business. With enough public support of programs like these, customers can send the message to large institutions that small is profitable for all.
Corporate profits last quarter were the highest ever recorded, and yet American workers still languish, barely hanging on to uncertain unemployment extensions. How can that be? Because of "productivity." That is to say, these profits are aided by the barely dampened American appetite for goods combined with a drastically scaled back payroll. In turn, the largest companies keep prices low, attracting even more beleaguered shoppers. Small businesses, which are less likely or able to lay off, cannot compete with these razor-thin margins. At some point -- and that point is now -- economies of scale results in a scaled down economy for the average American.
American companies are also flush with cash. Imagine Scrooge McDuck (himself, a lampoon of that other satirical holiday Dickensian favorite, Ebenezer) diving into his glorious gold-coined hoard, and you're not too far off: the Federal Reserve reported that as of this March, nonfinancial American corporations were sitting on $1.85 trillion in cash and other liquid assets, a 26% increase over 2009. Paralyzed by fears of another economic downturn, a so-called "double dip," these companies refuse to hire or expand.
Meanwhile, banks are not doing their part for the economy. Instead of employing the multiplier effect -- the conversion of deposits into loans for businesses and homes, thereby generating jobs, and, ultimately, more capital -- large banks are sitting on their own piles of gold, which the government allows them to maintain at historically low interest rates.
Small businesses don't have the luxury of hoarding cash and slashing labor stock. Instead, they constantly reinvest in their businesses in the hopes of getting a grip on that elusive lowest rung on the capitalist ladder. And if they can't? Well, we all recognize the sad blight of a vacant storefront. Go to facebook.com/smallbusinesssaturday to show your support and receive updates on this latest local business movement. And if you're a AmEx user, for goodness sake, at least buy that free $25 gift.
Small Business Saturday represents this country's opportunity to throw itself a lifeline. Small businesses bring foot traffic, renovate old spaces, preserve town and neighborhood character, thereby generating communal pride and goodwill. They serve on local boards and make charitable donations -- in cash and in kind. They create the vast majority of new jobs in this country, and they spend their profits locally. And while small businesses wait patiently on America to notice their tremendous worth, customers flock to the big box and the online discount retailer. I know, I know: we're in a recession. But listen -- the big corporations aren't getting us out of this mess. And for folks who plead for less government intervention -- here's your chance to step in. This weekend, try to add a little local to your discount diet. It might be a struggle, but it's the best thing for your community's long-term economic health.
Correction: An earlier version of this post inaccurately described the requirements for American Express card users to obtain a $25 statement credit. In order to receive the $25 statement credit, American Express card members must pre-register their cards on facebook.com/smallbusinesssaturday and then spend at least $25 at a locally owned, brick-and-mortar retailer on 11/27.
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