Big Government and Affirmative Action: the Scandalous History of the Small Business Administration.

• Author: Moreno, Paul
• Position: Book Review

By Jonathan J. Bean Louisville: University Press of Kentucky, 2001. Pp. xii, 224. $29.95 cloth.

In Big Government and Affirmative Action, Jonathan J. Bean tells the story of the role of small business in the growth of the American state. This compact account is a fine sequel to the author's award-winning Beyond the Broker State: A History of the Federal Government's Policies Toward Small Business, 1936-61 (Chapel Hill: University of North Carolina Press, 1996). It describes the process by which interest-group actors (business groups, congressional committee, and bureaucrats) operate to build nearly indestructible government programs. In addition, the book adds an important dimension to the story of the development of affirmative action. In manifold ways, congressional and bureaucratic policy toward "disadvantaged" businesses adumbrated later policy toward disadvantaged minorities and myriad other victim groups, and the Small Business Administration (SBA) itself took up minority preferences as its raison d'etre.

The most striking feature of the SBA story is that the agency did not come to life as the result of pressure from the small-business lobby. There has never been a satisfactory definition of small business, and the closest things to a small-business lobby actually opposed government attempts to help it. The SBA ignored the smallest businesses. The agency does not fit the "iron triangle" model that political scientists have used to describe how Congress, bureaucrats, and business lobbies create and maintain regulatory agencies. It has been almost entirely a "creature of Congress," especially of certain committees, whose members appealed to the myth of independent enterprise as a means of justifying the distribution of favors to constituents. The federal government has not acted as a "broker" among interest groups, but instead has pursued its own interests.

The SBA quickly became a patronage machine for both Republicans (who used it to deflect criticism that they were beholden to "big" business) and Democrats (who used it as proof that they were not "antibusiness"), so it is not surprising that it became embroiled in repeated corruption scandals. Bean points out that both 1996 presidential candidates were tainted by SBA-related improprieties and that the White-water investigation and ultimately the Clinton impeachment grew out of an SBA minority-set-aside scam. Bean pulls no punches and is nonpartisan, as his account of the Reagan-era...