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American small businesses needn't go extinct

A generation after the introduction of this approach, the result is clear. The seemingly endless variety of products in our stores is controlled by an ever smaller number of immense trading companies that, increasingly, charge us higher prices. And we have witnessed the greatest consolidation of economic power since the days of J.D. Rockefeller and J.P. Morgan.

The good news is that, thanks to the ceaseless creative energy of American entrepreneurs, we are seeing a renaissance of small farms and farmers markets across the country, and a resurgence of local business communities in cities including Austin, Salt Lake City and Phoenix. But as vibrant as these movements may be, they operate mostly at the margins. Many of our most gifted entrepreneurs remain under siege by rivals armed not with better products or better business models, but more money.

Take John Cottam, who opened the Spectacle optical shop in Salt Lake City in 1985. Cottam, who in earlier ventures designed glasses for singer Elton John and the classic 1982 film "Blade Runner," told me that every day he must contend with the Italian eyewear goliath Luxottica. Over the past decade the people who run this company have rolled up control of thousands of retail outlets across America, under such brands as LensCrafters, Pearle Vision, Target Optical and Sunglass Hut -- many of which compete directly with Cottam.

To compound the challenge, Luxottica has also acquired many of the brands -- such as Oliver Peoples and Oakley -- that Cottam's customers expect to find at the Spectacle. "All of us little guys are nervous," Cottam said. "There's always that fear that they will control everything."

Then there's Sam Calagione, who built Dogfish Head Craft Brewery into a regional success in Delaware and Maryland. However, the shelf space across the country for his ales is limited not by the tastes of America's beer drinkers but by the people in charge of Anheuser-Busch InBev and SABMiller, two foreign-owned trading companies that directly control some 80 percent of all beer sold in America.

Or consider what any American entrepreneur faces if he or she decides to go head to head in any line of business against Wal-Mart.

The woes are even present in franchising; although many franchise operations remain true to their cooperative spirit, a growing number function like pyramid schemes, with money flowing from the many small franchisees to a tiny group of managers who control the brand.

For more than two centuries, small businesses have been a prime source of wealth and well-being in America, creating jobs, bringing better ideas to market, building middle-class communities and, in the case of many immigrants, instilling the practices and values of American society. Today, we can recover the right to make a living by serving our own neighbors and our own communities through our own open markets. We may have to adapt some of our laws to account for new conditions, but the basic models we need await us in our own recent past.

Barry C. Lynn is a senior fellow at the New America Foundation and the author of "Cornered: The New Monopoly Capitalism and the Economics of Destruction."

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