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Perhaps the biggest problem with crony capitalism is how it hurts our small business job growth engine which thus determines the very strength of our economy. When a corporation finds a political bed member in Washington DC, they can request legislative changes in the law that favor them and hurt their smaller competitors. Once these smaller businesses become bankrupt, the corporate giants could increase their prices again. This obviously hurts our economy in several ways:
1. Higher Prices – consumers pay more and this decrees their purchasing power and standard of living
2. Small Businesses Close – job losses
3. Barriers to Entry – other businesses can not compete and this exacerbates the first two problems
Often that is the evolution of business, what is unfortunate is when it works out that way due to crony-capitalism, or the good ole 'boy networks in towns and states, or the insidiousness of Ivy League fraternity nepotism with friends in high-places . There are scoundrels in our mid. Just as a homeless alcoholic will hold up a sign for food, and duly take your hard-earned donated cash to his fraudulent cause not to the bank or grocery store but to the nearest liquor store down the street or more often next door for the laziest of panhandlers, we can expect that humans will always attempt to cheat the system to their advantage regardless of what that system is.
It does not matter if it is a pretty boy prosecutor lawyer or a mobster on the FBI wanted list – it's fraud, it's steeling and it is unethical – that's the problem. I am not complaining about the system, it is better here than in other countries – at least there is the illusion of free enterprise, rather I am just 'observing humans in their natural habitat,' this world of modernity overlay on what is basically the same human brain DNA sequencing with the same physiological needs from the last 20,000 years, or last 5,000 if you are a Christian.
So do we bother to follow the money, if so, do we follow the alcoholic bum into the liquor store to prove ourselves right? Do we put more regulations on corporations, lobbyists, small businesses? That's probably worse, we make the system even more inefficient. Should we just reduce regulations and not give corporations an advantage, I mean that they do not need an advantage, they already have one – it's size – law of bigness – it's actually a natural law of the jungle right?
Do we watch every business with massive surveillance? Do we profile everyone who runs a business, even if our modeling is based on false axioms of logic, only to find we locked the door and screw away the key to our success by trashing on the integrity of the last honest standout? Are all corporations bad?
No. Do they do what's in their best interests, of course? Does not everyone for the most part do what is or what they perceive to be in their best interests at the time, to get what they want? The question is why do we allow our politicians to accept bribes in the form of lobbying? If we invented that our free-market system would be preserved far better and in a more efficient manner as well.
Now then, a good book to read on the subject of small businesses being taken over by large ones, consider; "Rule Makers, Rule Breakers," by Motley Fools. Please think on this.