Excluding Disadvantaged Businesses
Title
Excluding Disadvantaged Businesses
Description
Laws that subsidize small businesses frequently fail to reach owners most in need of governmental support. Small business owners, especially those who are historically marginalized and discriminated against, are particularly vulnerable in times of market crisis. However, in many instances, laws designed to support small businesses exclude certain disadvantaged businesses from competing in markets by denying government assistance.
This is the first Article to place focus on the ways that well-intentioned laws designed to aid small businesses harm the most disadvantaged ones. I focus on several examples, including the recently enacted Paycheck Protection Program, federal and state procurement preferences, and social equity programs in recreational cannabis licensing. In each instance, laws designed to support disadvantaged businesses serve to exclude them. For example, the Paycheck Protection Program denied loans to business owners with certain criminal histories. Government procurement pro-grams create exclusionary costs for participation. Finally, state-level social equity programs in recreational cannabis licensing favor already entrenched owners at the expense of communities most impacted by the war on drugs.
Lawmakers considering preferences for disadvantaged businesses ought to focus on the way the law excludes certain business owners. Government purchasing to favor owners based on sex and race, which face strict scrutiny review, ought to continue in ways that include new entrants in industry participation. At the same time, transfers of capital through loans, grants, and the tax code, ought to continue and expand to the extent that they remedy exclusion. To operationalize such proposals, economic justice campaigns, which have proliferated in recent years, can, and in some cases already do, advocate for economic development interventions that avoid excluding disadvantaged business.
This is the first Article to place focus on the ways that well-intentioned laws designed to aid small businesses harm the most disadvantaged ones. I focus on several examples, including the recently enacted Paycheck Protection Program, federal and state procurement preferences, and social equity programs in recreational cannabis licensing. In each instance, laws designed to support disadvantaged businesses serve to exclude them. For example, the Paycheck Protection Program denied loans to business owners with certain criminal histories. Government procurement pro-grams create exclusionary costs for participation. Finally, state-level social equity programs in recreational cannabis licensing favor already entrenched owners at the expense of communities most impacted by the war on drugs.
Lawmakers considering preferences for disadvantaged businesses ought to focus on the way the law excludes certain business owners. Government purchasing to favor owners based on sex and race, which face strict scrutiny review, ought to continue in ways that include new entrants in industry participation. At the same time, transfers of capital through loans, grants, and the tax code, ought to continue and expand to the extent that they remedy exclusion. To operationalize such proposals, economic justice campaigns, which have proliferated in recent years, can, and in some cases already do, advocate for economic development interventions that avoid excluding disadvantaged business.
Creator
Publisher
George Mason Law Review
Date
2021
Format
PDF
Language
English
Bibliographic Citation
Edward W. De Barbieri, Excluding Disadvantaged Businesses, 28 GEO. MASON L. REV. 901 (2021).
Files
Collection
Citation
Edward W. De Barbieri, “Excluding Disadvantaged Businesses,” Albany Law Faculty Scholarship, accessed May 6, 2024, https://albanylaw.omeka.net/items/show/182.