By Arnold Kling
there is a name for this economic policy: corporatism. Big government favors selected big business and rewards big labor as a junior partner. It’s not socialism, but the economic component of a fascist political program. Credit administered on a favorable terms is the narcotic that anesthetizes businessmen to the creeping government control of their firms. To paraphrase Lenin, government seizes control of the commanding heights of the economy.
Meanwhile, Ed Glaeser writes,
a 10 percent increase in the number of firms per worker in 1977 is associated with a 9 percent increase in employment growth between 1977 and 2000. An abundance of small, independent firms is, along with January temperature and share of the population with college degrees, one of the best predictors of urban growth.
Economic stimulus comes from small business, not from big companies bailed out by the government. Too bad more policy makers aren’t reading From Poverty to Prosperity.
My co-author Nick Schulz displays a chart that might explain why our economic policy is what it is.