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Sarbanes-Oxley: helps big businesses, stifles small ones

This is my second post in one night about how, (1) governmental regulations that were meant to help and protect…someone, presumably…actually only help big, wealthy businesses, and, (2) their supporters never actually expected them to do any good for the general public, to begin with.

B.K. Marcus writes about “putting the BIG in Big Business”. There was a recent article in the New York Times about the fact that no venture capitalist–backed business went public in 2008 Q2, the first time since 1978 that the United States has gone an entire quarter without one going public. Marcus’s friend (or friend of a friend…it isn’t clear) commented thusly:

The ginormous costs inflicted by Sarbanes-Oxley have killed going public for many startups. Companies now face a couple million bucks a year in new compliance costs and pervasive controls over just about everything they do on top of all the other headaches of going public. That increases the temptation for going the buyout route and lessens interest in initial startup funding. Surely the last couple years’ changes in stock option accounting rules have hurt startups’ ability to pull talent, too.

B.K. says,

This is the pattern with all such regulations. The bigger corporations support them, quietly or not, because they can bear the costs and thereby eliminate competition from “below.” And the Marxoids say that unregulated capitalism has a natural tendency toward monopoly…

The Left loves small markets, small merchants, small businesses, but then does everything they can to promote the bigness of business — in the name of fighting Big Business.

This is exactly what Karen De Coster was saying Sarbanes-Oxley would do, back when it was a recent development.

The system is designed to reward the powerful and connected and screw the little guy.