An economic narrative is beginning to take hold that because most small business owners have no plans for bringing new ideas to market or growing their companies, the U.S. economy will only come roaring back if it's large established companies start spending the roughly $2 trillion in cash they are sitting on.
This narrative has been revived in a paper published in the fall issue of Brookings Papers on Economic Activity by two economists from the University of Chicago, Erik Hurst and Benjamin Pugsley.
?Hurst and Pugsley are right to question the growth potential of the small business sector taken as a whole. But their paper and its implicit endorsement of bigness is being misconstrued by a growing number of commentators.
?As a significant body of research has shown, it is not small business that drives the creation of new jobs or even major productivity advances, but new business.