corporations are in bed with the federal government. America suffers from rampant runaway corporatism

and crony capitalism. So how can we fix this problem? How can we make the economic playing

field more fair? Well, it's tempting to think there's an easy solution: all we need

to do is increase government's power to control and police corporations and the economy.

The thinking is that government, unlike corporations, is accountable to the people, but that solution

might be the very thing causing the problem.

When you give government the power to pick winners and losers in the economy, the rich

and well connected will be the winners. Here are two reasons why. First, the power to regulate

the economy is the same thing as the power to distribute favors. This is because when

government agencies have the power to regulate industries, grant subsidies, or otherwise

control the rules of the economic game, their decisions have huge financial repercussions

on the groups involved. So corporations have a massive incentive to try to influence how

that power gets used. The more the corporation has at stake, the more it will spend to gain

control through lobbying, campaign contributions, political appointments, and other means. Pick

any sector: finance, agriculture, health care, automotive manufacturing, or countless others.

You can bet that the regulations currently in place were influenced by, sometimes even

partially written by, one or more of the corporations they regulate.

Second, regulations hurt small businesses more than they hurt big businesses. So more

regulations means we end up with more big businesses. And this isn't just because

of the lobbying big businesses do. Simply reading and understanding the regulations

that apply to your industry, let alone completing the complicated paperwork, reports, new equipment

purchases, and infrastructure updates takes a lot of staff time and money. Large, established

companies can more easily hire staff to focus solely on compliance and pay for necessary

upgrades and other costs, while many small businesses can't afford to do any of these

things, meaning they have to close, they limit expansion, or they never start up in the first

place. The Small Business Administration, a government agency, estimates that it costs

a small business with 20 or fewer employees around 40 percent more to comply with government

regulations than it costs a large company with 500 or more employees. So extensive government

regulation, by its very nature, encourages the success of larger and larger companies

while hurting existing small businesses and discouraging the start of new ones. These

are just a couple of the ways in which the current collusion between corporations and

government is a result of government power. It may seem paradoxical, but if we reduce

government power over the economy, then corporations will have less power to compete for, fewer

privileges to seek, fewer subsidies to enjoy, and no agencies to capture. There will be

a more level playing field for large and small firms alike.

Cronyism and corporatism are like runaway fires. In important ways, government power

over the market just throws more fuel on the fire. If you want to kill the fire, we need

to cut the fuel.

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