The Silicon Valley Bank crisis has shown that government bailouts tend to benefit big, established companies, which is not how capitalism is supposed to work. The decline in competitive churn is a side-effect of the rescue culture that has been growing since the 1980s. The number of US companies that remain in the top 10 from one decade to the next has risen steadily, from just three in 1990 to six at the end of the 2010s. Today, the top five US companies are bigger than the next five by the largest margin since the early 1980s. The rise of US monopolies has been accompanied by the decline of smaller US companies and start-ups. In China, the prospects of internet giants such as Alibaba and Tencent have risen and fallen mainly with the intensity of government regulation. The US government is not as intrusive as China’s, but it still distorts markets when it rescues banks. Rescues distort the way capital is allocated, shifting decisions into political hands. Markets stop trying to figure out what makes economic sense, and start anticipating what the state will support. But a society exhausted by crises seems increasingly comfortable with this perversion of incentives.
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