For all too long, the people of our generation have been mistaking our country’s current economic system for mostly free market capitalism.
This is a detrimental mistake. Our current economic system is an impure mixture of unhelpful regulations and big business pampering.
This system is called corporatism. In corporatism, supposedly beneficial regulations backfire and end up hurting small businesses and helping big businesses and corporations.
Terms like “too big to fail,” and “bailouts,” run freely among politicians and the like. In true free market capitalism, big businesses must be responsible for their failures and will collapse and close if they aren’t careful.
In capitalism, regulations that can often be extremely burdensome on up and coming small businesses are lifted so that they may prosper.
In our current environment, many small businesses are stamped out by not being able to keep up with all the many precarious government requirements, taxes, or fees and they close down or never even start.
This allows the few preexisting big businesses to run the market as they always have.
Take the beer market, for example. There were only a few family-run beer companies that managed to stick around through prohibition and resumed business afterwards.
Government quickly regulated the alcohol industry to a very extreme extent, practically closing it off from any new competitors.
Since then almost no new beer manufacturer has entered the national scale marketplace.
Yes, there are many brands for you to choose from, but all of them are owned by the same few companies.
Heineken owns Heineken, Tecate, Sol, Dos Equis, and several more. Molson Coors owns Coors, Keystone, Miller, and more.
If you read farther into it, you will find that the same five companies own all the major brands for beer and have for quite some time.
If the marketplace were to be deregulated, other companies would have the opportunity to enter the market and compete with these giants.
Corporatism is the name given to the system that has restricted this marketplace and given way to allow these behemoths to rule, not capitalism.
The beer market is only one small example. There are plenty of other offensive regulations in almost every given aspect of the American marketplace that are incredibly unfavorable to small businesses.
Politicians claim they support small businesses but their regulations and support of crony capitalism say otherwise.
By fooling ourselves into thinking that America could never stray away from capitalism, we’ve chosen to believe that capitalism is to blame for all of our market failures and economic difficulties.
We refuse to believe that it is the suffocating rules and regulations of our seemingly benevolent government. Capitalism has no room to support a military-industrial complex or multi-thousand page regulation books and tax codes.
This is no longer our free market system, and cannot be blamed for the mistakes of our government.
The only businesses that can survive and even thrive through devastating regulations are the huge corporations everyone claims they oppose.
The point is, next time the market hits a large rough patch, instead of attacking the easy scapegoat, perhaps look a little farther into the matter and see what players really had a hand in the matter.
Was it the failure of supply and demand, or was it the work of an endless playbook of government regulations? Capitalism doesn’t play favorites with old big businesses, but corporatism absolutely will.
Nick Castellini Management major castelln@umail.iu.edu
