Government imposed regulations limit innovation and protect big corporations from more agile and customer-responsive smaller businesses. Large corporations, with layers and layers of bureaucracy, simply cannot respond to market forces nearly as well as their smaller competitors. Flatter organizations with fewer layers of bureaucracy, on the other hand, can, and most often will, make common sense decisions quicker and more efficiently, endearing them to their customers. This is a much greater challenge to larger businesses that must seek consensus among many leaders before they can react to the needs of their customers.
How regulations favor big-business:
Regulations therefore benefit large corporations due to the red tape it imposes on their smaller competitors. Such red tape is commonplace in a large business that has the resources to manage such obstacles, but smaller businesses are put at a huge disadvantage because they must hire an army of accountants and attorneys to navigate the regulatory maze.
Large businesses know the more their smaller competitors are hindered by hurtles, the more they are forced to divert their meager resources to avoid legal problems and the more difficult it is therefor for smaller businesses to respond to customer and market needs. This makes the smaller businesses much easier to eradicate from a marketplace by their large corporate competitors. Utilizing the coercive power of government, the more volumes of regulations a large business can impose upon their smaller competitors, the more effectively they can limit the means of production within their market.
Big corporations, though, cannot impose these hindrances upon their competition in a free market, although in a society inundated with corporatism, it is only a matter of buying off the appropriate politicians. This is a clear advantage to big corporations with plenty of capital to buy politicians, but this is not the case for smaller competitors that operate with far less expendable cash and therefore possess far less influence in government.
Politicians sell this idea to the voting public in the name of protecting them from “evil corporations” while neglecting to make the point that regardless of what regulations exist in a market, it has always been and will always be (in a moral society) illegal and punishable to bring harm or violate the equal rights of any individual. This is why regulations and politicians, not free markets, make it easier for corporations to dominate.
Clearly politicians are not going to dole out power and influence over competition and markets for free.
By holding the cards on regulations, politicians own both the carrot and the stick to influence every business, and the degree of control correlates perfectly to the amount of regulations they are allowed to impose. The more regulations the politicians can impose upon and industry, the more arbitrarily they can pick and choose winners and losers. This is the ultimate goal of power-hungry politicians whose unquenchable thirst to impose their will upon others is endless.
As regulatory environments become more and more convoluted and impossible to legally navigate, the more politicians can arbitrarily pursue certain businesses for violations while ignoring those perpetrated by the businesses they favor.
This is the core of corporatism and why the United States is drowning in it.
Here’s the proof:
Top regulated industries according to the Mercatus Center at George Mason University:
- The petroleum and coal products manufacturing industry
- The electric industry
- The motor vehicle manufacturing industry
- The nondepository credit intermediation industry
- The depository credit intermediation industry
- The scheduled air transportation industry
- The fishing industry
- The oil and gas extraction industry
- The pharmaceutical and medical manufacturing industry
What do nearly all of these industries have in common? Most not only receive massive amounts of taxpayer money to operate, the majority have been bailed out of their failed policies by the money citizens earn every day to pay their bills and live their life. This is not a coincidence. Did their smaller competitors receive the same benefit? Absolutely not.
Recall “too big to fail.”
America is a corporate state, and the regulatory environment not only ensures this remains the case, but also pushes the United States further and further into corporatism as regulations mount. Politicians benefit by the control they amass as they impose their will on corporations, and in turn big-business benefit by drowning their smaller and more agile competitors in legal red tape.
Everyone wins but the American taxpayer, families, and all consumers.
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