Tristero — Tales from the new depression

Tales From The New Depression

by tristero

Today in the Times, Robert Reich discusses the strange surge in entrepreneurship and start-ups during the Great Recession:

LAST year was a fabulous one for entrepreneurs, at least according to the Kauffman Index of Entrepreneurial Activity released last month by the Ewing Marion Kauffman Foundation. “Rather than making history for its deep recession and record unemployment,” the foundation reported, “2009 might instead be remembered as the year business startups reached their highest level in 14 years — even exceeding the number of startups during the peak 1999-2000 technology boom.”

Another surprise is the age of these new entrepreneurs. According to the report, most of the growth in startups was propelled by 35- to 44-year-olds, followed by people 55 to 64. Forget Internet whiz kids in their 20’s. It’s the gray-heads who are taking the reins of the new startup economy. And if you thought minorities had been hit particularly hard by this awful recession, think again. According to the report, entrepreneurship increased more among African-Americans than among whites.

Well, that sounds kind of cool, right, my fellow Americans? Strike out on your own! It’s the American way! Be your own boss! There are fortunes to be made!!! Except…

That’s just not what’s happening. There hasn’t been an increase in that Leave To Reagan (or was it Beaver? I get them confused) go-it-alone can-do spirit. Nope. It’s just plain unemployment:

Booted off company payrolls, millions of Americans had no choice but to try selling themselves. Another term for “entrepreneur” is “self-employed.”

According to an analysis of Bureau of Labor Statistics by an outplacement firm, Challenger Gray & Christmas, the number of self-employed Americans rose to 8.9 million last December, up from 8.7 million a year earlier. Self-employment among those 55 to 64 rose to nearly two million, 5 percent higher than in 2008. Among people over 65, the ranks of the self-employed swelled 29 percent. Many older people who had expected to retire discovered their 401(k)’s had shrunk and their homes were worthless. So they became “entrepreneurs,” too.

But many folks who are actually working under the rubric “self-employed” aren’t, by any serious definition, self-employed. No, they are hired by companies but are classified as such so that companies can skip out on paying health insurance and other benefits. And of course, the temp agency that places them in their old job, or similar ones, grabs a piece of their income. Is this a great country or what?

Reich’s article illustrates all this by referring to the fate of a friend of his, some white-collar middle-management type, apparently. It’s a familiar, sad story. But, as it happens, there’s even a better example in today’s Times of exactly what the increase in “entrepreneurship” means. Julia Moskin’s article begins in the slightly breathless style that characterizes much “soft” journalism found in the dining section, with the spare – and therefore very effective – use of an effusive adjective or two to heighten the scene. But…well, you’ll see:

THEY carry home-grown radishes and red-cooked pork. They transport dozens of empanadas, juggling sheet pans on the G train. They pack boxes of butterscotch cupcakes, Sichuan-spiced beef jerky and grapefruit marmalade. They haul boiled peanuts, ice-grinding machines, sandwich presses and at least one toaster oven painted hot pink.

One Saturday morning each month, the vendors of the Greenpoint Food Market converge on the Church of the Messiah in Brooklyn.

“This is my investment in the future right now,” said Fabiana Lee, 26, an interior designer who lost her job in 2009. She has been selling at the Greenpoint market since its inception in October. After experimenting with cookies (too much competition), she has pared her offerings down to two: gorgeously browned empanadas and irresistibly twee “cake pops,” golf-ball-size rounds of cake perched on lollipop sticks. At the moment, they are her main source of income.

Young, college-educated, Internet-savvy, unemployed and hoping to find a place in the food world outside the traditional route, she is typical of the city’s dozens of new food entrepreneurs. As the next generation of cooks comes of age, it seems that many might bypass restaurant kitchens altogether. Instead, they see themselves driving trucks full of artisanal cheese around the country, founding organic breweries, bartering vegan pâtés for grass-fed local beef, or (most often) making it big in baking as the next Magnolia Bakery.

There are many things to be said about this passage. First of all, this is skilled, subtle reporting. After hitting our senses hard with visions of piles of “gorgeously browned empanadas” and irresistible cake pops, our drooling tongues are guiltily pulled back into our mouths when we learn that this 26-year-old’s sole source of income is producing small quantities of this very labor-intensive yuppie snack food.

Please don’t misunderstand me. By this time, I hope my respect for artisanal foods, and the people who make and eat them, can be taken for granted. If not, let me state categorically that I am sure that I would love Ms. Lee’s food and I have the utmost respect for the high quality of her wares. However, that doesn’t change the economic facts here. She has, apparently, exactly one day a month to sell her food, only pretty upscale people can afford to buy her products, and she takes home $500 on a good day. This is day-to-day living, New York-style, in the 21st Century, and it’s very frightening to contemplate.

And there’s more scary stuff in this passage than that. Did it register? These new food “entrepreneurs” don’t have any access to capital. Moskin reports they aren’t opening up bakeries or little shops. Translated, that means that not only is real estate too expensive but that these well-educated, deeply committed, hard-working people can’t – not won’t, but can’t – qualify for business loans. Not only do they not have jobs. They don’t have assets.

This is what Reich is talking about when he says the spurt in entrepreneurship is utterly misleading. At the end of the article Moskin, sticks the knife in and twists it:

At the end of the day, said Ms. Asselin, the vendors are very tired, very thirsty (much of the food is very sweet, very salty or both) and not much richer.

“It’s hard work,” said Hannah Goldberg, speaking about her time at the Hester Street Fair. “Our ancestors came through the Lower East Side to find a better life, and our parents think it’s crazy that we’re back here selling from a pushcart.”

Thus the effects of 8 years of conservative misrule, unrestrained and utterly corrupt financial markets, and a public discourse that provides non-stop, exclusive exposure for conservative/corporate propaganda with no disputation.* Even if Obama had a less compromised financial team, Bushism bequeathed him a well-nigh impossible hand.