Political Entrepreneurship vs Market Entrepreneurship: Who's afraid of a government shutdown? 

If you listened to the U.S. Chamber of Commerce, the D.Ç.-based business lobby, small business could be hit hardest by a government shutdown. The Chamber's blog, FreeEnterprise.com, linked with worry to this Wall Street Journal piece about how small business would suffer the most from a government shutdown.

Both the Chamber and the WSJ article focussed on a potential delay in Small Business Administration loans and a suspension of government contracts, making it ironic that Chamber is blogging about this at FreeEnterprise.com. They're worried about losing subsidies and government money, after all.

But the Chamber's Washington lobbyists, in their fierce efforts to ward off a shutdown (I wrote a column about that last week), might once again be at odds with its more free-market oriented small-business base. My brother John at CNBC.com checked out a survey of small businessmen, and found these conclusions:

  • 84.4% of small business owners believe there will be no impact on privately-held companies from a one-day shutdown; tapers to 75.7% for one week; 60.6% for two weeks.
  • 96.7% believe there will be no impact on hiring plans for privately-held companies for a one-day shutdown; tapers to 93.5% for one week; 89.6% for two weeks.
  • 98.8% believe there will be no impact on current employment base for privately-held companies for a one-day shutdown; tapers to 98.1% for one week; 97.0% for two weeks.

“The idea that a government shutdown would have a short-term impact on critical areas such as hiring and staffing is not supported by data,” said John Paglia, associate professor of finance at Pepperdine University’s Graziadio School of Business and Management.

My general observation: small businessmen tend to favor the free market. Bigger businesses are more likely to seek and support subsidies and regulations. Lobbyists for both are more government oriented, just like the marketing department of any business will be marketing-oriented.

You can read the full study here.

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Timothy P. Carney

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