Big Government, Big Business, Big Problems

5-Minute Videos  ⋅  Carol Roth  ⋅  

Since the start of the Covid crisis, the American economy has been turned on its head. Times are good for the big guys — Big Business and Big Government. But what about for the small business owner, the personification of the American dream?

Browse All Videos

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.