Time to Cut Off the Chains?
Sometimes forgotten amid the news of stimulus packages, bailouts, mortgage meltdown, and market crash are the series of bankruptcies that have left big-box stores around the country vacant. In any other year, the failure of Circuit City, Linens n Things, and a number of other brands would be the top story of the day. These stories aren't getting the coverage they deserve, and the question of whether big retail chains can survive isnt being asked. Is it time we reconsider whether the dominance of Wal-Mart, Best Buy, Home Depot, Lowe's, and their big-box cousins should come to an end and be replaced by smaller, locally-owned stores that existed in decades past?
Entire industries are failing, and because large conglomerates have scooped up dozens of smaller companies under one corporate umbrella, the impact is devastating. It's analogous to the mortgage crisis, which was partly caused by huge banks over-extending themselves and creating a domino effect across the country when they ran out of credit. The term "too big to fail" has been thrown around by politicians and economists to describe these corporations, but should they have ever gotten that big? When Circuit City declared bankruptcy, tens of thousands of people lost their jobs, and hundreds of storefronts were left vacant. If there was no Circuit City, and instead thousands of small electronics stores scattered across the country, could the problem have been avoided?
The same goes for the newspaper industry, which is facing declining revenue and increased costs. Not every newspaper is losing money, but all are affected. Why? Over the last few decades, a handful of news conglomerates bought up local papers so that when a few have financial difficulties, they all feel the pinch. I'm sure at some point the papers enjoyed savings by sharing employees and costs, but was it worth the risk?
Huge companies need huge lines of credit to survive. When those lines of credit dry up (as they have), companies fail. A corner hardware store may only need a small business loan from a locally-owned bank to survive an economic downturn. If one goes under, there are always a few others to take its place. If Home Depot and Lowe's go under, we're in trouble.
Another advantage of smaller, locally-owned stores? The money isn't all funneled up to the corporate headquarters. Yes, the owner makes more than hourly workers, but there isn't the same wage disparity that exists today between frontline workers and CEO's. Ninety-five percent of workers make minimum wage with no healthcare, and the executives take home tens of millions of dollars. That isn't the spirit of American entrepreneurship.
Maybe more bankruptcies will pave the way for a new surge in small business development. Families will run newspapers again instead of faceless board members, city downtowns will be renewed by local restaurants and shops, and Main Street will overtake Wall Street in power, not just popularity in the latest polls. If there ever was a time it could happen, it's now.
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