Monday 14 July 2003

Free the small business

Much of the opposition to "capitalism" comes from those who are quite fond of small businesses but don't like big corporations. I don't mind how large a business becomes provided that its size is the result of unencumbered market forces. All too often that is not the case. Small businesses are cutting back on employment because of the rising cost of liability insurance:
THE ongoing crisis in the liability insurance market is costing jobs, according the Federation of Small Businesses, which says 20% of its members surveyed in a recent poll have either frozen or cut back on employment in response to increasing costs.

The UK-wide poll of 1200 small firms - defined as those employing 50 people or less - found one in five reporting a doubling of premium costs on top of last year's "dramatic" increases.

Spokesmen for small businesses are calling for "a review of all legislation and policy changes that might result in additional increases to liability insurance." Good. What they also need to point out is that government legislation usually affects small businesses disproportionately and is often introduced after lobbying by big businesses that understand this only too well. It's a good way of knocking out smaller competitors. Much of the regulatory nonsense that emanates from the European Union is done at the behest of big businesses that wouldn't be able to compete in a genuinely free market. Indeed, according to Professor Thomas DiLorenzo, pandering to special interest groups at the expense of the free market was the cause of the American Civil War.