Is Small Business Bad for America?

You can’t flip through the business section of any US newspaper without stumbling across some paean to small business.  But the Economist‘s Free Exchange blog recently noted that, for all of that happy talk, the US economy is dominated by large enterprises just like most other developed economies. (Click the chart to get a sense of it.)  So is this just empty boosterism?  Are small businesses in fact a drag on the economy?  Actually, the Free Exchange folks think it is the US promotion of small business that has produced an economy dominated by giants:

Why are small businesses important to an economy? Not because small itself is beautiful. Rather, it’s because the best small firms become big, spreading good ideas across the entire economy and creating lots of jobs through expansion.

The presence of large businesses in America could become a problem if those businesses use their size to quash competition, through anti-competitive practices or political rent-seeking. But in general, America’s large businesses are a testament to the fact that in the American economy, the successful are allowed to grow. And grow and grow and grow.

Good thing we’ve managed to avoid political rent-seeking and anti-competitive practices, eh Microsoft, Google, Citibank, etc. ? What was it that thing that Teddy Roosevelt used to yammer on about?  Anti-trust regulations, wasn’t that it?  What ever happened to that stuff?  Wouldn’t that have a role to play in a dynamic economy like the one the Free Exchange folks are describing?  Anyway, you can read the full post here.

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