Economics

The Not-So-Small Business Administration

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New York Times business writer Robb Mandelbaum recently highlighted a new rule from the federal Small Business Administration expanding the definition of "small business" to include some 18,000 businesses "that until now have been unable to take a government-backed loan or to get assistance winning federal contracts." In other words, some not-so-small businesses have successfully persuaded the feds to change the rules on their behalf. It's not exactly a shocking story and Mandelbaum reports it in a fairly straightforward manner. At least until he drops this little nugget:

Political pressures inexorably push up small-business size definitions. That, at least, is the theory of Jonathan Bean, author of a history of the S.B.A. provocatively titled "Big Government and Affirmative Action." As the name suggests, this is not exactly a work of scholarship; it's a polemic offered by an ideologue staunchly opposed to any S.B.A.-style intervention in supposedly free markets. Nonetheless, the events of the last several weeks suggest Mr. Bean has a point.

Can't you just feel Mandelbaum's pain as he typed that unforgiving last sentence: "Nonetheless…Mr. Bean has a point." And indeed, Professor Bean does have a point, as any reader of his scholarly work would already know. Political pressures do in fact "inexorably push up small-business size definitions." As for Mandelbaum's breezy dismissal of Bean's book, The Journal of American History praised Bean's "careful analysis, his all-encompassing bibliography, and his inclusive endnotes," which together made Big Government and Affirmative Action "the definitive monograph." That's high praise from a serious academic journal, which hardly corresponds to Mandelbaum's erroneous labeling of it as a "polemic." Though perhaps Mandlebaum just scanned the title and promotional copy on Amazon in order to make a cheap point. Whatever the cause, it's sloppy journalism.