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Comment by devoply | Hacker News Reader

The problem with small business is that the way the economy is set up most of the money is available at the medium to big business side of things. Small business does not have the capital to pay employees properly. So really it should not exist in the way the economy is structured. So it won't exist if you take cheap labour out of the picture. It's not as if small business robber barons are making bank on the back of poor workers. They are not. They are barely surviving.

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So how about letting the signalling that money and pricing is supposed to do actually take place instead of suppressing it?

If there is such a problem - and I agree with you that there is - then something should be done about the cause instead of the symptom. Which won't happen if the symptom is successfully suppressed.

So to me the question is, let their be the pain that is meant to be there (signal!) so that something can change, or try to avoid the long-overdue correction. What I see in the real world is different in what I learned in economics 101 in that the signal function of prices is suppressed instead of used as far as the labor market is concerned - but only in one direction ("wages are getting too high!").

I think trying to avoid pain at all cost is similar to when people have a condition that lets them feel no pain. It sounds great but actually leads to self-destruction. Let the prices (wages) rise! Yes it will lead to small businesses having to give up. Either they are not actually needed, or society as a whole undervalues (and underpays) the role of those businesses. Or a mix of the two. Time to find out?

If that sounds like I'm for restricting immigration, I'm actually for much more legal(!) immigration. The problem with illegal immigration is that people are forced to subsist in the shadows. I think this distorts the (low end but similarly for H1 jobs) labor market far more (towards slave conditions and low wages) than the same amount of legal immigration would do, which would give immigrants a perspective and a lot more choices while having to endure a lot less anxiety.

Yes small businesses employ a lot of low skill labor and therefore are hit in the short term the hardest with a lack of labor surplus.

In the long term, this is necessary for wages to rise. When all restaurants have to compete for a diminishing labor pool, they'll have have to raise their prices to pay people decently.

This is a good thing.

Beyond this specific case, the problem is the unfair competition for human resources between small and big companies. For example, how can you compete with Google for a software engineer? The unfair part is that Google can establish a company in Ireland to avoid taxes while you can barely organize your taxes.

I am not saying there are no ways to compete (e.g. give more equity, sell a startup dream) but that the inequalities are not only between the rich and poor gap, they are present in companies too.

It's not just that. It's that big business can have economies of scale which allows it to push out each unit at a cheaper price point. This then trains consumers to want things at certain price points which then makes it difficult or impossible to compete with larger companies. Further it is much easier for larger business to get investor money and debt financing, so if they want to expand it's much easier for them to do so than for small business. Also for B2B it's again much easier for big business because most of the spending done in the economy is by big business, and they don't care that much about price as consumers and can afford a lot more because they have lots saved up. So there are many factors that favor big business and shut out the little guy who is doing it because he wants more autonomy in his life.

> Small business does not have the capital to pay employees properly. So really it should not exist in the way the economy is structured. So it won't exist if you take cheap labour out of the picture.

If the result is people renovating their houses left often or building smaller houses in general, then maybe it's a fair price to pay for more social cohesion?

a building contractor who "turned down 20 mil" is not a mom and pop store

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