There was the Great Depression (1932-1940) …
The Great Recession (2008-2009) …
And now the Great Consolidation, a historic transfer of wealth and power from the middle
class to the already wealthy and well-connected.
Big Government and Big Business are dismantling and reshaping the American economy. It works
for them—they are bigger, stronger, and richer than ever—but it doesn’t work for
most Americans.
This is especially true for the engine of economic growth—the small business owner.
More than 30 million small businesses account for about half the GDP and jobs in America;
the other half of the economy is concentrated in around 20,000 big companies.
Based on that almost equal split of economic value, you might expect that small businesses
have the same clout as big businesses.
Not even close.
Big corporations are masters of the political game. They have the money to pay the lobbyists,
lawyers, and politicians to get what they need. And, in turn, the government gets what
it needs from Big Business—cooperation, compliance, and campaign contributions.
Small businesses are on the sidelines of this game. Your local butcher, baker, and candlestick
maker simply don’t have the cash to make big campaign contributions or hire lobbying
teams.
Still, for all these disadvantages, the entrepreneurial spirit that has long defined America has never
waned.
Then came Covid—or rather, the government reaction to Covid.
"Two weeks to slow the spread" became month after month of lockdowns and ever-shifting
restrictions that destroyed hundreds of thousands of small businesses and left millions more
hanging on by a thread.
Big firms were deemed "essential" and allowed to stay open, while small businesses were
subjected to punishing lockdown orders and forced to close, in part or in full. The hypocrisy
presented by this government edict—Big Box open, Mom and Pop not—was obvious for all
to see. These decisions were not based on science but on political influence.
You could take Fido to PetSmart to have his hair groomed and his nails trimmed, but not
take yourself to your favorite salon for a pedicure. How does that make sense?
Or how about this example:
In Los Angeles, the Pineapple Hill Saloon and Grill was forced to close its outdoor
dining area—while a movie production hosted a catering tent serving food to its cast and
crew in the same parking lot that the restaurant had been forced to abandon.
The results of this arrangement weren’t hard to predict: spending that couldn't be
done at small businesses was shifted to the ones that were open: big businesses.
In this environment small businesses were “too small to succeed” not because of
anything they did but because the government wouldn’t allow them to serve their customers—all
their work, money, and hopes and dreams were crushed by government mandate.
It was the worst of times for the little guy. And the best of times for the Big Guys: Big
Business and Big Government.
As Big Government flexed its power with lockdowns and spending and the Federal Reserve pumped
money into the markets, big businesses and their investors did great. Seven technology
companies alone gained more than $3 trillion in value and the wealthiest became even wealthier.
Now, Big Business isn’t bad in its own right. After all, every big business started as a
small one. Big businesses create products and services that add value to our lives.
Nobody should begrudge them making millions or even billions in profit—that is, if it
is done on merit. It is a big problem, though, when it is done through the government limiting
or even shutting down the competition—small business. That’s not free-market capitalism.
That’s cronyism.
And there’s no evidence that this trend—Big Government and Big Business getting bigger—is
going to end anytime soon.
Who’s going stop it?
Not Big Business. It always benefits from less competition.
Not Big Government. Small business owners are too hard to control. It is much easier
to manage a handful of big corporations feeding at the government trough, than millions of
entrepreneurs who just want to pursue economic freedom.
If we are not careful, the Great Consolidation will end with Big Business and Big Government
fully in control. That means less choice in products and services, less choice in jobs,
less innovation and more barriers to wealth creation.
Big does not equal better. At some point, it usually means worse.
But we’re not powerless. We have the dollars, and we have the votes.
It’s time we use them.
Before we lose them.
I’m Carol Roth, author of the The War on Small Business for
Prager University.