How Government Regulation Created Concentrated Power and Crushed Independence
For decades, Americans were told that free markets reward innovation, competition, and hard work. That was the promise of capitalism — and for much of our history, it was true. But look closer at today’s economy, and you’ll see something different. Since 1997, the number of public companies in the United States has fallen from over 8,000 to barely 4,000. At the same time, the largest 10 corporations now account for more than 30% of the S&P 500’s total value.
We are witnessing something more than the natural ebb and flow of business. We are watching the rise of a system that looks less like free-market capitalism and more like oligarchy — a concentration of economic and political power in the hands of a few. And here is the uncomfortable truth: this didn’t happen by accident. It happened because of government action — selective regulation that tilted the playing field toward the largest firms while leaving independents to struggle.
The Government-Created Oligarchy
When people hear “oligarchy,” they think of Russian billionaires or shadowy cabals. But America’s oligarchy has been built in broad daylight, through regulatory choices made in Washington. Consider just a few:
1. Rule 10b-18 (1982): Before 1982, stock buybacks were rare because they risked being treated as illegal manipulation. Rule 10b-18 created a “safe harbor,” unleashing trillions in buybacks that enriched executives and institutional investors.
2. Sarbanes–Oxley (2002): After the Enron scandal, Washington imposed sweeping compliance requirements on public firms. Large companies absorbed the costs; small and mid-sized companies could not. The result? IPOs dried up.
3. Dodd–Frank (2010): Intended to rein in Wall Street, it ended up layering new burdens on public companies while private equity largely escaped, fueling private capital.
4. Tax Policy: Buybacks received more favorable tax treatment than dividends, disproportionately benefiting the wealthiest households.
5. Antitrust Drift: Regulators relaxed enforcement, allowing mega-mergers in airlines, banks, media, tech, and healthcare.
Evidence of Oligarchy
Look at the results:
– Fewer Choices: Four airlines control most domestic travel. A handful of banks dominate finance. Five tech giants hold power over communication, commerce, and information.
– Wealth Concentration: The top 10% of households own nearly 90% of stocks. Buybacks funnel cash to them, while independent businesses see little benefit.
– Political Capture: The same corporations dominating markets also spend the most on lobbying and campaign contributions. Their influence shapes regulations that protect dominance.
This is not free-market capitalism. It is a government-enabled oligarchy.
The Independent Business Squeeze
Nowhere is the squeeze felt more than among independent businesses. They don’t get carve-outs or safe harbors. They don’t have armies of lobbyists. They can’t manipulate EPS with buybacks or navigate Sarbanes–Oxley with billion-dollar compliance teams.
Instead, they play by the rules — and too often, those rules are written to favor their largest competitors. Independent businesses are the backbone of job creation and community vitality. When they are shut out, America loses not just competition, but opportunity.
Is There a Way Back?
The good news is that oligarchy is not inevitable. It was created by policy, and it can be reversed by policy. Four steps would make a dramatic difference:
1. Rescind Rule 10b-18: End the buyback safe harbor.
2. Reform Public Company Rules: Tailor compliance to company size so mid-sized firms can go public affordably.
3. Level the Tax Code: Equalize treatment between dividends and buybacks.
4. Revive Antitrust Enforcement: Stop rubber-stamping mega-mergers.
The Future if We Do Nothing
If we fail to act, the trajectory is clear:
– Fewer Public Companies: Likely only 2,500–3,000 left, dominated by mega-caps.
– Private Gatekeepers: Growth companies remain private, accessible only to wealthy investors.
– Oligopoly Markets: Industries consolidate further, reducing consumer choice and opportunity.
– Political Entrenchment: Concentration deepens political capture.
That future looks far less like a free-market democracy and far more like an entrenched oligarchy.
Conclusion: Time to Restore Independence
So, is there a true oligarchy in America? The answer is yes — but not the shadowy conspiracy of populist imagination. The real oligarchy was created by government regulation that tilted the system toward consolidation and away from independence.
If we want to restore the American Dream, we must restore independence. That means policies that favor productive investment over financial engineering, competition over consolidation, and opportunity over oligarchy.
Because the truth is simple: a free people cannot thrive under an economy run by oligarchs. If we want capitalism to serve all Americans, not just the few, it’s time to break the cycle of government-created concentration and return to a system that rewards builders, risk-takers, and independent business owners.
Steve Beaman is a financial analyst and the chairman of the Elevare Club.
