Just Say No to Small Business Subsidies


A new paper from the American Enterprise Institute pooh-poohs the veneration of all businesses small and beautiful. From the summary:

This paper concludes that there is no reason to base our policies on the idea that small businesses are more deserving of government favor than big companies. And absent other inefficiencies that would hinder small businesses performances, there is no legitimate argument for their preferential treatment. Hence the paper suggests ending all small businesses' subsidies.

Whole paper as pdf here. It details both the love affair the U.S. has with small businesses and the various breaks and subsidies they get. But the best bit is a table that shows how phony most "job creation" stats are–they routinely account for far more than 100 percent of new net jobs.

The notion that small businesses are the engine of job creation and the one thing that stands between Americans and bread lines is incredibly resilient and popular, with both Republicans and Democrats, cons and libs. Years back–in 1994–former Reason Editor Virginia Postrel punctured "small business myths":

The politics of small-business favoritism has sacrificed truth to myth. And it has encouraged the hubris of would-be planners. Telling government officials that you can identify what size companies will create jobs doesn't encourage entrepreneurship. It supports the old political game of picking winners. It is industrial policy with a populist face.

Whole thing here.