California’s War Against ProsperityThe Golden State’s abundant resources and innovative people are not reflected in the way it is governed.
By Edward Ring
June 13, 2023
According to the U.S. Small Business Administration, small businesses are the backbone of the U.S. economy, generating 44 percent of all business activity. Take them out of the equation, and the economy collapses. But that is exactly what’s happening. The cards are stacked against small businesses in America today, and nowhere is it worse than in the state of California.
Here, the rules are rigged to make it more difficult for small, independent contractors and independent businesspeople to survive, much less thrive. Excessive regulations invariably favor large companies because the cost of complying is far easier for a company with a billion dollars in annual revenue than it is for a company with a million dollars in annual revenue.
This obvious fact is well understood by corporate monopolists whose rollup and consolidation of industry after industry in America has only accelerated in recent years. This excerpt from a January report by S&P Global, sums up the trend: “In 91 of 157 primary industries, the five largest U.S. companies by revenue combine for at least 80% of total revenue.”
The report goes on to explain how monopoly power is a double-edged sword. On one hand, “growing monopoly power stifles competition and productivity in the U.S. economy.” The counterargument is that “very, very productive firms end up dominating the industry.” From the perspective of the ordinary American worker, either as an employee of a monopolistic corporation, or as an independent proprietor trying to compete in markets getting swallowed up by the giants, both of these arguments are true, and both are bad news.
The fact that regulations actually benefit the largest corporations clearly doesn’t translate to a recognition by progressive voters that deregulation—or at the very least, a more judicious application of regulatory oversight—might help small business survive and might help consumers avoid new rounds of price gouging when a few giant companies capture entire markets. And California is ground zero for this cognitive dissonance.
A more subtle impact of excessive regulations is how it redirects productivity, rendering the value of enhanced productivity far more ambivalent than one might suppose. In California, for example, with costs for land, energy, and raw materials driven artificially high due to regulations, gains in productivity are offset by higher costs for these inputs and by higher costs to comply with regulations. Apart from wiping out the smaller competition—which is good for the monopolies—where is the benefit?
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Source:
https://amgreatness.com/2023/06/13/californias-war-against-prosperity/
