The recovery is here — as long as you’re a big business. The Wall Street Journal reported this week that “Big U.S. companies have emerged from the deepest recession since World War II more productive, more profitable, flush with cash and less burdened by debt.”
Meanwhile new business formation is at a 30-year low. These two dynamics are both fruits from the same tree. That is, increased corporatism — more regulation, more subsidies — helps big, established, politically connected businesses, while preventing new entrants and killing small business.
There’s data, regarding banks, suggesting bigger government yields more industry consolidation.
I wrote about this last week:
The Obama-Bush bailouts and the moral hazard they created have saved large corporations from extinction or contraction and allowed them access to cheaper capital. This slows the process of creative destruction that allows new businesses to grow, and it tilts the playing field in favor of the big guys. The handouts and subsidies of Obamanomics also flow naturally toward the biggest companies, which can afford to hire Obama’s donors, fundraisers and former staffers as lobbyists — witness Boeing’s two-thirds share of Export-Import Bank loan guarantees from 2009-2011.
And Jonah Goldberg makes a related point:
When government takes it upon itself to be the ally of business, certain biases often take over. For instance, existing industries have a huge advantage over ones that haven’t been created yet. A more obvious bias is toward big companies over small ones. Big companies create constituencies and can afford lobbyists to make their case. Moreover, big business becomes a tempting vehicle for other policies like, say, providing health care. And why not: When government is scratching business’s back, why shouldn’t business return the favor?
I imagine many on the Left will see big business’s success as a justification to call for even more government. Republicans, though, should use it as an indictment of Obamanomics.
