Everyone loves small businesses. People extol their virtues, politicians and the chattering classes always say wonderful things about them and point at them as the source of innovation and jobs creation, and we often hear about how mom-and-pop operations should be patronized and favored over the impersonal big-box operations. People often express admiration for small business owners, and there’s something fundamentally American in the entrepreneurial spirit that motivates some to take on the risk of starting a business.
When it comes to big business, however, love seems scarce. Suspicion, leeriness, distrust, a sense of caveat emptor and outright hostility appear far more common. We see big businesses as the enemies of small businesses, as big hungry sharks that seek to hoover up or kill off the little guys. We presume that they are operated by the malevolent and the underhanded. That distrust and suspicion often translates into a collective will to impose government on big business, to regulate it, to impose counterbalances to that presumed malevolence. And of course, politicians respond, and create rules and bureaucracies in order to rein in and “keep honest” those big businesses in order to protect consumers.
Those who pay attention know the reality of government and big business: the fact that the regulators are often best pals with the regulated, that the counterbalances rarely work as intended and often do far more harm to the small businesses than to the big businesses. This reality is only tangential, however, to the question of the moment, the difference in public attitudes towards businesses big vs small. How does admiration for a small business become distrust for a big business? When does a business go from being small and beloved to big and despised? What happens that supposedly turns the business owners “evil?”
Obviously, this is a silly question, but so much of what society and government do to businesses seems to presume exactly such a transformation. The more successful a business or entrepreneur gets, the more government does to him. Progressive taxation, mandates that kick in once certain employee count thresholds are crossed, regulations that are imposed once a particular size is reached – all are manifestations of an antipathy to too much success. The most recent ones include the ObamaCare mandates and New York City’s sick leave mandate, but there are countless others that have preceded these. Sure, this will be masked or explained away as a combination of “those that can pay more should pay more” and “we have to protect the workers and the public” sophistry, but if success and the entrepreneurial spirit are something we as a society wish to celebrate, we shouldn’t be punishing those who have proven to be best at it.
This phenomenon isn’t unique to America, either. Progressive taxation and massive regulation of business is the norm in Old Europe. France is drowning in 49 employee companies because hiring a 50th kicks in all sorts of new regulations and mandates. Coffee growers can’t get “Fair Trade” certified if they’re too big or if they choose to go it alone rather than joining a rules-rich cooperative. Again, the message is clear – if you’ve achieved some modest degree of success, great. If you get too big for your britches, however, you’re going to pay. Chalk it up to the desire to control, to jealousy, to greed (echoes of Milton Friedman’s ‘who’s greedier than a politician?’ sentiment), or simply to numbers – there are relatively few successful entrepreneurs in the voting ranks, so their interests are subordinated to pandering to everyone else.
Once a company is truly big, however, the real effect of these mandates and regulations turns on its head. Large businesses can better absorb the overhead cost of regulation, they’ve got better leverage in negotiating with insurance providers for health and other coverage for their employees, and, most importantly and most cynically, they have input into the development of regulations and access to government largesse. The government involvement that’s intended to protect the people from big business ends up benefiting big business at the expense of small business.
Wikipedia describes the American Dream as “a set of ideals in which freedom includes the opportunity for prosperity and success, and an upward social mobility achieved through hard work.” Yet the message, clear as a bell when one knows what to look for, is that there’s an upper limit to how much “dream” people want you to achieve. Sure, you can break past that upper limit, just as a jet can break past the sound barrier into (smoother) supersonic flight, but cracking that barrier is being made harder and harder. Some entrepreneurs do manage to become very wealthy, and reach the point where the big government apparatus starts working to their relative benefit instead of detriment, but that’s not something that society and government encourages. And, as time moves forward, the height of that barrier seems to get lower and lower. Small businessman? Entrepreneur? Maker of a better mousetrap? We love you! But, only so long as you stay small. Too much success? No, we don’t wish that upon you.
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