SMEs are bad – exemption from regulations creates exploitation of workers and the environment.

That bigness and market power are major problems does not mean that companies can never be too small. Like all things, this is a question of balance. The defenders of bigness are on the firmest ground, not when they argue for size itself, but when they argue that American politics often fetishizes smallness to a destructive degree.

Even as U.S. lawmakers fret about giant corporations and lament the death of the small proprietor, they remain wedded to the free market doctrines that dismantled the tools we used to fight concentration and market power directly. The only remaining route to defending small businesses is to essentially exempt them from regulations: from environmental laws, from workplace safety requirements, from anti-discrimination rules, and more. This creates a race to the bottom, in which smaller companies are permitted to exploit workers, defile the environment, and violate all sorts of other minimum standards, all in the name of allowing them to preserve some meager amount of remaining market share. Paradoxically, our indulgence of bigness has led policymakers to defend smallness in the worst possible way.

As Bruenig details (along with Atkinson and Lind) federal laws that forbid discriminating against workers based on race, gender, religion, or disability only apply to businesses with 15 or more workers; for laws against age discrimination, it's 20 or more workers. The federal minimum wage exempts employers with gross annual revenue under $500,000, as well as employers that don't do business in multiple states. The list of exemptions for small firms goes on to include all sorts of other regulations, from worker safety to environmental rules and more.

Once again, in theory, these federal regulations are limited from applying to smaller businesses by the Constitution's interstate commerce clause. But in practice, jurisprudence hasn't been that much of an obstacle. These exemptions are most often choices that Congress has freely written into law, as opposed to necessities enforced by the courts. And they are choices driven solely by a subjective preference for smallness — or, arguably, by cynical rhetorical performance driven by the recognition that paeans to the beauties of smallness sell — even when smallness means degraded conditions for workers.

This makes no sense. The point of creating new businesses and competing in the market is to make society better and more prosperous. If a particular business model cannot provide its workers with a $15-per-hour living wage, or if it cannot treat its surrounding ecology with respect, why should that business model exist? Is it not failing the very aims we are trying to achieve through market-based experimentation? Yes, companies that possess greater scale and resources will find it easier to meet these sorts of strict minimum standards, and some of their mom-and-pop competitors will be wiped out. But enforcing these floors without exception is not going to kill every business but Walmart and Amazon.

There is a common narrative that small companies are the engine of job creation in the economy, but this is also wrong: More or less by definition, small businesses fail as often as they start, and that ongoing churn of failure destroys roughly as many jobs as small business startups create. This is not necessarily to say that big companies are the real job creators; it's more that, when it comes to job creation, concerning yourself with size misses the point. How many jobs are out there and how well they pay is ultimately a function of the economy's aggregate demand for labor versus the aggregate supply of workers. That, in turn, is primarily a product of national fiscal and monetary policy. Blowing holes in the minimum standards we demand of employers in an effort to juice job creation is a fool's errand.