Following my overview of the parts that make up the local economy, what is the role of self-employment in the local economy? What is the potential of the self-employed for local regeneration?
Innovation
New invention, a road with many twists and turns! aitoff / Pixabay
What do the self-employed contribute to the local economy? Last time, I suggested innovation, so let’s start with that:
- New ideas are rare. Most new ideas are new takes on old ideas. Once new ideas develop, they in their turn open up new possibilities. Capacity restricts new ideas – the sole trader may need to manufacture a new product, for example.
- Ideas imported from elsewhere may work where the idea is viable but the market is too small to support a business with a national focus. My experience in community development suggests ideas copied in an uncritical way are rarely successful. Why? Possibly because the first time they did their ground work and did not rush to action. The random application of a successful idea from elsewhere can be a disaster.
- A need identified for the first time may lead to adopting an idea new to that place.
- Old idea managed better. Not all ideas fail because they are bad ideas. Poorly managed or marketed good ideas sometimes deserve a second shot.
- Ideas adapted for a new market work where there is a known market that fits the new idea.
Role
OK you have an idea and somehow you’ve got it to work. What are you likely to contribute to the local economy? Note these are possible contributions a successful business may make to the local economy. Many businesses are not successful enough to make these contributions. This is the nature of the risk self-employed people make.
However, this is where things get a bit slippery. There are a number of scams which call certain activities self-employment that are not. If you become self-employed to receive work from others, whether it is driving taxis, cleaning, delivering dinners; you may be exploited. This is a way certain unscrupulous business people wriggle out of employment regulation. Such employment may suit some people but it is not what I am writing about here.
What do genuine self-employed people contribute to their local economy?
- Many self-employed people trade locally and so help maintain the flow of money in circulation.
- Some do not trade locally, making their income from working for national or international clients. We may wish to discount their contribution to the local economy but all self-employed contribute by spending locally.
- A business that is in profit will pay taxes. Many business owners are happy to do so because it shows they have a viable business. Taxes do not necessarily benefit your locality but they are spent somewhere and so result in redistribution between areas. These are political decisions and so implies business owners have a stake in politics.
- Some self-employed employ staff and so contribute more money into the local economy by that route. This is a serious undertaking because now more people will depend on the business. The employer who cares for the local economy will pay at least the living wage because that will put more money into circulation.
- Working in partnership with other businesses can increase effectiveness whilst being flexible.
- Investment in other businesses is another option for the successful business.
The Adverse Economy
Potentially, the self-employed contribute significantly to the local economy. In practice, many self-employed experiments do not result in a level of activity that will result in these roles. The economic environment is extremely adverse, perhaps more so than it should be. If too little money is in circulation, then many businesses will fail simply because there is not enough money in circulation to support them.
Our economy is in serious disrepair and it is for local businesses to seriously address how to repair it. We know from decades of experience, politicians are interested solely in the big players, corporations or unions and don’t support small businesses. The result is the self-employed must keep going on their own reserves, a wing and a prayer!
In your experience, what contribution do self-employed make to the local economy?