3c hapter - Index of

The Local Imperative 49
own account. 4 When billionaire Sam Zell bought the media company,
which publishes the Chicago Tribune and Los Angeles Times
among many other newspapers, in a leveraged buyout in 2007, he
engineered an elaborate structure that allowed him to take advantage
of a 1996 provision intended to spur employee ownership of
small business. 5 (The tax holiday still didn’t save the company from
collapsing under the weight of its debt and mismanagement: Tribune
fi led for Chapter 11 bankruptcy protection in December 2008.) In
1980, before the rules for pass- through entities were loosened, the
share of net business income earned by traditional corporations was
80 percent. By 2007, it had shrunk to 53 percent. 6
Small business parameters are similarly skewed when it comes
to procurement. By law, the federal government must spend
23 percent of its prime contracts with small business. Yet various
loopholes have allowed some of the largest companies in the
United States, Europe, and Asia, including Boeing, Northrop
Grumman, Bechtel, and British Aerospace, to qualify for small
business contracts—diverting $100 billion a year from small business,
according to the American Small Business League. The group
estimates that less than 5 percent of federal contracts are actually
awarded to small business. That’s a loss for us all. A Senate study
suggests that every 1 percent increase in federal contracts to small
businesses would create more than 100,000 jobs. 7
For the purposes of this book, however, we are concerned
with real small businesses making real things or providing true
services. That may include sole proprietorships, mom- and-pops,
high- growth startups, and established companies with a couple
of hundred employees. The companies may be involved in food
and agriculture, like Milk Thistle Farm, or high- tech manufacturing,
like Moebius Technologies. The defi ning characteristic
of a locavestor business is that it is locally owned and rooted in
a community. It is not run by absentee owners who dictate decisions
affecting a community from a far- off headquarters with the
sole intent of maximizing profi t. A locavestor business pays local
taxes and is a stakeholder in its region. These are the small businesses
that make up the fabric of our communities, adding to
their diversity, character, and wealth, the businesses that we want