A THEORETICAL FRAMEWORK FOR SMALL BUSINESS POLICY

A number of public policy issues have been discussed in this article, the most important of which are: 1. Small business would not need special consideration if our economy were basically a competitive one. 2. A large and growing segment of our economy has sufficient market and political power to make our economy basically non-competitive. 3. Small firms tend to provide price competition, to lead in the development of new products and processes, and to generate new innovations and new employment. 4. Government policy tends to create artificial economies of scale, giving an unwarranted advantage to the very large firm. As a first approximation, a policy of government neutrality on firms of varying size is needed. But, because of discriminations which already exist which favor large firms over small firms, special small business programs may be necessary to provide an equitable policy base. Unfortunately, programs designed to benefit all business, like the investment tax credit, tend to primarily benefit larger firms (Berney, 1979). This is the case for two reasons. First, there is a basic difference in production relationships: large firms tend to be more capital intensive and small firms more labor intensive. Second, the more complex a rule or regulation, the more costly it is for small business to use it. Consequently, even the employment tax credit, which should benefit the small firm is not used by them. Instead, it tends more to benefit the larger firm. Neutrality, as a governmental policy, would appear to demand different treatment for firms of varying size. As an example, the “regulatory flexibility” concept applies different standards to different sized firms so that the burden of regulation is more equitably distributed. The concept of encouraging or requiring financial institutions and other lenders to establish “dual prime rates” is a further example. Since small firms appear to have much higher debt to equity ratios and rely more heavily on shorter-term bank credit, they are more heavily burdened by a tight money policy which forces increases of interest rates. Thus, dual prime rates help to spread the burden of rising interest costs more equally. As many people prefer to work for themselves, equalizing the burden of government policy could only serve to increase the basic growth rate for small business, thus providing an easier start for entrepreneurs and would encourage a more rapid rate of economic growth. None of these discussions, however, argues that small business should be protected from failure. The more efficient firms will succeed and prosper, and the least efficient will not. Many currently successful entrepreneurs learn how to improve their production processes or managerial skills from their failures. What is being recommended as a first step is that government should concentrate on equalizing burdens and benefits in order to achieve true neutrality. If private economies of scale do indeed exist, new firms must grow to survive; what the government should not create are artificial economies of scale with public policy. A strong argument for further action can also be made: it appears that significant external benefits are produced by an economic system with a dynamic small business sector. Since these benefits go to society as a whole rather than entrepreneurs alone in the form of increased profits, a freely operating market without government assistance does not generate as many new small businesses as would be optimal for our society. To internalize the benefits that come from small business, governmental programs need to be devised to increase the rate of return on new, innovative small businesses. Should this happen, we could then anticipate increased rapid rates of innovation and technological change, more rapid rates of employment growth, expanded price competition in all sectors of the economy, and improved export capabilities, in short, true flexibility in our capitalistic system.     

Immigration,the Celtic Tiger and the economic crisis

Abstract

This article addresses the puzzle of why Ireland has proved so open to immigration. It compares responses to immigrants in the Republic of Ireland during the Celtic Tiger era and during the post-2008 economic crisis and finds no evidence of a political backlash during the latter period even though opinion polls suggest that opposition to immigration had increased and other evidence suggested that there had been an increase in racist incidents within Irish society. Nor did the resumption of large-scale emigration trigger political hostility to immigrants. The outcome of the 2004 Referendum on Citizenship, which removed a constitutional right to Irish citizenship to the Irish-born children of immigrants, suggested that that nationalism still matters hugely and a latent tendency towards ethnic chauvinism amongst the host population. Yet, a decade after the 2004 Referendum it looked as if the old mono-ethnic sense conception of the Irish nation had been disrupted, at least a little bit.     

Exploratory Models in a time of Big Data

This paper aims to trigger discourse about the emergence of a new type of social scientific model — Exploratory Models — which draw on Big Data, computer modeling and interdisciplinary research to tackle complex social scientific processes. First, we define Exploratory Models referring to Batty and Morgan and Morrison. We then present changes to the traditional modeling paradigm. We show how Exploratory Models circumvent challenges related to the idiosyncracy, self-reflexivity and acceleration of social phenomena, which limit predictive effectiveness of traditional models. We show that Exploratory Models are better equipped to tackle complex problems due to their capacity to process heterogeneous datasets. Having established that Exploratory Models are predominantly problem- and data-driven, we emphasize that scientific theory is indispensable to their progress. Finally, the development of an integrative platform is suggested as a way of maximizing the benefits of this approach. Discussion concludes by flagging areas for further research.     

Policy Bubbles

We develop the concept of a policy bubble to capture the notion of long‐term overinvestment in a policy. In sketching the relation of policy bubbles to economic bubbles, we describe how these two concepts have similar origins but different trajectories because they are filtered by different institutions. We examine in some detail three likely instances of ongoing policy bubbles: crime policy, school reform (charter schools and private education vouchers), and the contracting and privatization of public services. We show how these cases differ from the housing bubble of 1997–2007, how they differ from each other, and the extent to which they can be considered policy bubbles. Last, we suggest this concept can help unify the policy process literature with the practice of policy evaluation and outline testable hypotheses for future research.