So I got angry once again.
At this beautiful conference I was taking part last night, when one of the speakers said, speaking of the Italian industrial system: “there are way too many small firms (SMEs) in Italy (he is right, see slide); it is time we realize SMALL IS UGLY.”
He backed this accusation by (correctly, again)arguing that large firms produce higher returns on average.
So, why did I get angry? Simple. One thing is to say: growing is beautiful, another one is to say that small is ugly. Because if you say the former, then you act to help. If you say the latter you turn your head away from SMEs and move on.
It is not only semantics. In the US you hear a lot “small is beautiful”. The future of the economy is based on small firms that will grow and win market shares. Knowing that, the US Administration in 1953 passed the Small Business Act (SBA), sort of a Constitution for the SMEs. Read the beauty of the incipit of the SBA:
“The essence of the American economic system of private enterprise is free competition. Only through full and free competition can free markets, free entry into business, and opportunities for the expression and growth of personal initiative and individual judgment be assured. The preservation and expansion of such competition is basic not only to the economic well-being but to the security of this Nation. Such security and well-being cannot be realized unless the actual and potential capacity of small business is encouraged and developed. It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise, to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government (including but not limited to contracts or subcontracts for maintenance, repair, and construction) be placed with small business enterprises, to insure that a fair proportion of the total sales of Government property be made to such enterprises, and to maintain and strengthen the overall economy of the Nation.”
Isn’t this powerful? In the name of competition, to generate future participation and the wealth of the Nation, we protect you today. Just as you would protect in his first years a young child so as to send him strong and mature around the world during his teens.
Where is Europe on this? Nowhere! It forbids shares of public contracts for SMEs, it does not impose asymmetric regulation on small firms compared to large ones. So in Europe large firms have it all. After all, they are the ones that can lobby more easily politics to get what they want. Without protection, so dies competition and fairness.
Among his quotes, I share with you the 3 ones I liked the most:
“What we need from scientists? Methods and equipments that are: a) cheap enough so that they are virtually accessible to everyone b) suitable for small-scale application c) compatible with mans’ need for creativity.”
Time will come when his message will rock the scene again.