By James Jay Carafano More than just the Twin Towers crumbled on 9/11. The terror attacks that day acted as a weapon of mass destruction among New York City’s small-business economy.
On Sept. 10, 2001, Manhattan was something of a small-business paradise. The borough was a magnet for high-paying jobs. And all those suits needed lattes, shoe shines, pressed shirts and a morning paper.
That changed in a single day. Just ask Robert Garber. In 1997, he started a downtown eatery called Bits, Bites and Baguettes. Sept. 10, 2001 was his busiest day ever. The next day he found his restaurant barricaded. It remained so for more than two months.
When Garber finally reopened, he had almost no customers. It took a $100,000 loan to keep the business afloat. He was not alone. 9/11 wiped out or severely affected 18,000 companies around ground zero. Most of them were small businesses.
How disasters like 9/11 and Hurricane Katrina affect small business is worth remembering. It can also highlight how dumb some of our homeland security programs remain.
After the 9/11 attacks, Washington rushed to create a national homeland security apparatus, charged with a daunting number of priorities. One of them was protecting “critical infrastructure” — stuff like hospitals and transportation networks. It was left to governors to identify the most critical infrastructure in their states.
That proved a stupid approach. Governors embraced a rather expansive definition of “critical.” One state, for example, included a popcorn plant on its list.
Protecting everything also proved a ridiculous goal. Ours is a huge country with a vast population. We have almost infinite vulnerabilities. No matter how much Washington spends, terrorists always have an option of just attacking something else. As a result, most of the billions of tax dollars thrown at critical infrastructure protection were just wasted.
Washington would have been much smarter to focus its efforts on infrastructure that is truly “vital to the heartbeat or America,” things like the financial networks or major facilities (nuclear power plants, for instance) where attacks could prove truly catastrophic.
The White House would have also been smart to dedicate more effort to address arguably our most critical infrastructure of all, our small and medium businesses. Virtually all independent businesses employ fewer than 500 workers.
But they make up over half of the American work force. The workers and the companies they serve are the backbone of the U.S. economy. On average, they create about two-thirds of all new jobs each year.
In a disaster, they are also the most vulnerable. Small enterprises usually have one location. They don’t have a backup place to operate. They don’t store files, records or other critical data off-site. They don’t have cash reserves to weather long business disruptions.
They don’t have a plan to deal with disasters or contingencies to ensure continuity of operations if they have to close for a while, can’t get supplies, or their customers can’t reach them or run out of money to buy from them.
Most small-business owners believe that, if disaster strikes, they’ll be back in business after only two or three days. But experience shows that’s not likely. According to government statistics, small firms typically are unable to resume normal operations until weeks or months after a catastrophe.
Obviously, this is a real problem. Yet Washington has done little more than throw money at it.
In the aftermath of 9/11, government agencies shoveled out almost $1 billion in small-business loans. It’s a grossly inefficient response. Emergency lending often falls victim to fraud and abuse. Moreover, it won’t hold up in a truly catastrophic disaster in which hundreds of thousands of lives are lost and business is severely disrupted over a wide geographic area.
American business may get a “small” taste of the problem this fall. Thanks to swine flu, a lot more sick employees may be staying home this flu season. Businesses will have to figure out how to muddle through.
Washington can help by, first, stopping the practice of issuing presidential disaster declarations every time there’s a cat up a tree. The number of declarations has skyrocketed since the Clinton presidency, and it’s still going up. As a result, states and localities are becoming overly dependent on Washington.
And that’s a real danger. When a truly major disaster strikes (think Katrina on steroids), it will overwhelm Washington’s resources. That will leave many localities and states on their own. If these officials — now expecting to “Let Uncle Sam Do It” — remain unprepared; they’ll fail. And many more people and businesses will die.
Communities need to start thinking how they are going to keep the “open for business” signs up when disaster strikes. They need to do that before dark days like 9/11. Lining up for federal checks after the disaster should not be part of the plan.
Examiner Columnist James Jay Carafano is a senior research fellow for national security at The Heritage Foundation ( heritage.org)
