Regulatory Burden as a Paradoxical Entrencher of Corporate Incumbency
The Gist
Complex regulations cost roughly the same to comply with whether you're a giant corporation or a small startup, so big companies can absorb these costs easily while new businesses often can't even get off the ground—meaning well-intentioned regulations meant to check corporate power can end up protecting the very corporate giants they were designed to challenge.
Conclusion
Regulatory policies favored by figures like Moyn (e.g., during the Obama administration) actually suppress small business formation, which ironically entrenches the very corporate gerontocracy they claim to oppose.
Premises
- Regulatory compliance costs—legal counsel, accounting, reporting requirements, licensing—are substantially fixed costs, meaning they impose a disproportionately larger per-unit burden on small and new firms than on large, established corporations.
- Large incumbent firms possess dedicated legal, compliance, and lobbying infrastructures that allow them not only to absorb regulatory costs but often to help draft or shape regulations in ways that raise barriers to entry for competitors.
- Empirical data from the Obama era (2009-2016) show a documented decline in new business formation rates and startup density relative to prior decades, coinciding with major regulatory expansions such as Dodd-Frank and ACA employer mandates.
- Independent economic research (e.g., Kauffman Foundation studies, NFIB surveys, academic labor economists) has identified rising regulatory burden as a significant contributing factor to reduced entrepreneurial entry, particularly among capital-constrained small businesses.
- When new business entry declines and small firm exit rates rise, market concentration increases among the remaining large, older incumbent firms, since fewer competitive challengers emerge to contest their position.
- Moyn and intellectually aligned figures explicitly supported expansive administrative and regulatory interventions during the Obama administration as tools for curbing corporate power and inequality.
Assumptions
- The observed decline in small business formation during this period is causally attributable in meaningful part to regulatory burden rather than being fully explained by other factors like the 2008 financial crisis recovery or technological shifts.
- The term 'corporate gerontocracy' meaningfully refers to entrenched large, older corporations whose market dominance is causally linked to reduced competitive pressure from new entrants.
- Moyn's specific policy preferences are accurately represented by, or closely aligned with, the broader Obama-era regulatory agenda being critiqued.