Big government, big business are 2 sides of the same coin

Conservatives are often accused of being the friend of Big Business because of their support of free markets. The irony of this argument, however, is that in reality it is Big Government – the child of most liberal policies – that is the best friend of big business.

The bigger government gets, the more it starts to intrude into peoples’ lives. When it comes to the economy, this means that it starts to put more burdensome, and often unnecessary, rules and regulations in place that make it hard to start, grow and run a business (e.g., excessive licensing fees and restrictions, unreasonable environmental regulations, health insurance mandates, special taxes on business, etc.).

As these intrusive policies multiply, what it creates is a scenario in which politically savvy businesses with enough money can navigate, and sometimes manipulate, the system to their advantage. Because small and medium-sized businesses by nature have fewer resources, they often cannot afford to play this political game, meaning that it is set up to favor big business with all of its lobbyists, political donations, and connections to people in power. As a result, this big government process almost always places the biggest burden on small business, giving big business the advantage. 

For instance, large businesses often support unnecessarily high training standards to obtain and keep a professional license (a.k.a. “continuing education requirements”), ostensibly to “protect consumers.” But in reality, the primary effect of such a policy is to increase the cost of starting and maintaining a new business in the licensed industry, especially for a cash-strapped small business. The result for large businesses is less competition from small businesses.

Empirical and real-world evidence correlates with this reasoning. For example, an analysis of economic regulation and the size of banks in different countries found that the more economic regulation there is, the larger the banks are on average. These banks’ size creates political advantages that other banks do not have, such as the likelihood of a bailout or the opportunity to put taxpayers on the hook for their risky investments because the banks are “too big to fail.” Big banks’ size also leads their receiving taxpayer-subsidized deals via government programs that smaller banks cannot access.

The health care industry is a sector of the economy that has become one of the most heavily regulated in recent decades. The outcome – predating Obamacare – has been a move toward bigger, more concentrated health care providers, with the result that today these providers’ size and the negotiating clout they have are driving the continued rise in health care costs. Further, the big health insurers and big pharmaceutical companies will receive the greatest financial windfall from the individual insurance and minimum coverage mandates contained in Obamacare.

Certainly, for political reasons if nothing else, liberals will continue to argue that conservatives and supporters of the free market are shills for big business. But in reality, liberal thinking and liberal policies are truly the best friends of both big government and big business.