Posts tagged with: big business

facebook_ad_large_1On-demand ride-sharing services such as Uber and Lyft are on the rise, allowing smartphone users to request cab drivers with the touch of a button. But though the services are popular with consumers and drivers alike, they’re finding less favor among their taxi-company competitors and the unions and government bureaucrats who protect them.

Calling for increased regulation, entrance fees, and insurance requirements, competitors are grappling to retain their privileged, insulated status. In Miami-Dade County, an area with particularly onerous restrictions and regulations, Diego Feliciano, president of the South Florida Taxicab Association, argues that the change is bound to “ruin the very thing it’s trying to improve,” all because it threatens the fat cats who pay his salary, and who can afford to jump through the regulatory hoops. “When looking at new technologies,” he writes, “we must also be sure people’s basic civil rights and the safety of the riding public are protected.”

Bringing these petty municipal battles into the limelight, actor Ashton Kutcher, an early investor in Uber, recently appeared on Jimmy Kimmel Live, decrying “antiquated legislation,” “old-school monopolies,” and “old-school governments” who continue to stand in the way of innovation and consumer demand. In areas like Miami, Kutcher says, there is a “Mafioso mentality” against letting the “new guys” in.

Indeed, as Miami’s Feliciano aptly demonstrates, the protectionist mindset only sees what is, viewing economic activity in static and self-centered terms, and failing to recognize or value the type of opportunity and possibility that comes with increased freedom and ownership. Feliciano claims that he’s interested in “safety” and “basic civil rights,” but the only folks being protected are those with power and pocketbooks. (more…)

In last night’s State of the Union address, President Obama commented that “even though banks on Wall Street are lending again, they’re mostly lending to bigger companies. Financing remains difficult for small-business owners across the country, even though they’re making a profit.”

He then offered some of our tax dollars to help: “So tonight, I’m proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat.”

The irony is that our government helped create this problem in the first place, both Republicans and Democrats. By repeatedly bailing out big corporations, Washington signaled the markets that it will protect “too-big-to-fail” companies if they should falter. So is it any surprise that big companies are attracting the lion’s share of the available credit?

What else has the government done to help? Well, it’s gobbling up an obscene portion of the world’s available credit by borrowing unheard of amounts of money. And by holding interest rates artificially low, it’s preventing the price function from coordinating the supply and demand of credit.

With help like this from the federal government, it’s a wonder there’s any credit left over for small businesses.