A blind spot? Really? Don't think it was a blind spot for Trump voters. Or the millions who don't bother to vote. They see only too clearly that we are ruled by a corporate oligopoly, and regime change is going to take a lot more than hope.
9
How many out in the "make America Great again" realize that we have been sold out? And this has been going on for years.
Think of Pogo's Cartoonist Walt Kelly for "We have met the enemy and he is us". He is us, never truer words were spoken.
Take the Carrier company in Indiana. Supposedly they had to move manufacturing to Mexico to make a profit. And to show everyone they weren't kidding they cut the CEO's salary to $5.7 million.
Now for you seniors there's Paul Ryan who can't wait to get rid of Medicare and Social Security because the tax cuts for corporate America and the 10% just made it impossible to continue with those give aways to you old dead beats. As an aside I guess Paul never heard of FICA.
This isn't Economics, this is greed and all of us are involved.
One more thing, Boing, the aircraft manufacturer has part of their planes manufacturerd in China. Why? So the Chinese will buy their planes.
Better wake up folks the end is coming, and it ain't going to be pretty.
15
The corporate "coup" has been a slow, but steady march to own and control " it all" for the last few decades. Throw in along the way the Democratic Party's embrace of corporate campaign contributions and complicitness on policies that hurt workers, and you have now a runaway, out of control vulture capitalism. All for the few and "incrementalism" for the peasants.
As far as I'm concerned, Revolution is now despite how many "palace guards" (police) they employ to attempt to crush our protests and dissent.
4
The concentration of extreme wealth in the hands of a few is a scenario which has played out with disastrous consequences many times in our history. It was pretty nice for the few for a short time, then......Alternatively, extreme socialism with the government controlling production and consumer spending has poor results, too....what to do?.....How about making corporations illegal....This way, everything would be owned by a real human, not an imaginary corporate "person"......Now that would change things....
2
Another ill effect of too much big business -- it is much easier to lay off employees No. 9000 to 10,000 than it is to let go employees 9 and 10. Small business owners know their employees, the contributions they've made to company growth, and the hardship they'll face with the loss of work.
14
"The hardware store has given way to The Home Depot.
"
No. Not yet it hasn't. I work for Westlake ACE Hardware, and we successfully cultivate customers away from Home Depot and Lowes...because we are about Customer Service.
10
I salute many commentators, who speak with commitment for reform and change. Most fear the resolute opposition of enormous interests will block democracy. Reasons given include the false expectation of easy money and a belief that government is bad. But one thing is missing.
If it got rolling under Reagan, it's worth remembering that 1980 was the first year more non-white than white babies were born in the U.S.. The take-off in 'populism' coincides with ethnic transition, from dominant to minority majorities. It's not Democrats who scored with identity politics, but Republicans. They defined taxes as money sent to minorities, so taxes are hated. Gov't is captured by minority interests, so gov't is evil. Immigrants and minorities cause crime, so police should be given free reign.
This is the elephant in the room, a Republican animal that stomps on everything.
9
"Everything old is new again." I am bone weary at our inability to learn from our history.
6
Republicans have never been supporters of small businesses. Look at SBA funding history...
“What we have achieved in this country is socialism for the rich and free enterprise for the poor.” Gore Vidal, August 2, 2014
13
The total from less than 20 to more than 20 thousand does not add up to 100%. There may be a reason, but if you don't tell us we might think the numbers are not reliable.
2
It's pretty simple.
The rich get richer, and the poor get poorer. Nowadays, though, the rich aren't even supposed to see or acknowledge the poor. They want 'em all out of sight, dead or in wage slavery, as long as they can't vote.
The criminalization of poverty is well under way: blame the victims, and claim god favors you if you're rich.
It's no way to live ...
13
I miss my small town stores, including the one my family owned, but the truth is that my family barely made ends meet until after I was an adult, at which time my father opened a very successful two-store restaurant "chain."
Though friends eschew the big box stores, they are most convenient for me, given that I live near two in a rural area where there are few other stores nearby. We have loads of restaurants and several groceries and chain drugstores, but no hardware stores, no bookstores, no small non-chain dollar stores, not even a fabric store, chain or not.
This is the wave of the future, along with online shopping, so I am trying to embrace it. I have found some great items online, with easy return policies that I have seldom had to use.
3
This article gets it exactly right. Big businesses are making the rich richer while the workers for those businesses and competing small businesses are losing financially.
Why is anyone surprised? Both the Republican and Democratic parties have made the welfare of big businesses their priority. The Republicans' favoring of big business is obvious, but Democrats have done their share. Jimmy Carter deregulated the airlines. Bill Clinton promoted and signed NAFTA. Obama saw his primary duty as protecting big banks and multinational hyper-capitalism, promoting the TPP in opposition to progressives.
You want to help workers and small businesses? Start by passing Medicare for All so that small businesses don't have the burden of providing health insurance and workers aren't tied to employers because of health insurance.
We need to look to politicians who see the problems that the hyper-capitalism of multinationals are causing for wealth inequality, for climate change and pollution. The Republicans have no such politicians, and the Democrats have precious few, whom the Democratic establishment is doing its best to suppress.
14
I’m serious about pursuing my idea to organize a national economic justice parade in every major U.S. city to celebrate America by raising awareness of the capture of our democracy by the wealthy corporate elites and the socioeconomic problems that it has caused. I call it a parade instead of a march because I view the enlightenment of the American public as a celebratory affair. You want some details? We can feature our greatest progressive minds, people who have worked on the economic justice issue for years. I envision setting up progressive advocates who have been working on the wealth and income inequality issue for years, such as Bernie Sanders, Robert Reich, Michael Moore and Elizabeth Warren in each city parade, marching for a short while, speaking, giving lectures and handing out educational material. I would actually invite corporations to participate to potentially obviate adverse action by the working classes.They could set up their own tables to distribute information, take applications and even sell their products and services. I envision some corporations actually increasing worker wages and lowering prices as a result of our parade. And think of the smorgasbord of food and drink such an event would attract. Somewhere Uncle Sam and Lady Liberty are dancing to an Ariana Grande song in anticipation of this event.
7
The family business my husband worked for was purchased about 6 months ago by a much larger investment firm. We are already feeling the sting. Our insurance payments have risen and his bonus has shrunk. The focus is now on maximizing profits rather than serving the customer. Prices are also rising for the customer. My husband plans to retire within the year, rather than waiting another 3 years as originally planned.
I saw this also about 10 years ago at my own workplace. Wonderful people, who had worked there for years, were let go in order to hire younger, cheaper employees. Some positions were never filled. Insurance and retirement benefits have declined significantly.The attention to the clients has declined.
I wonder when the rebellion will occur?
22
If this trend continues, ultimately we will have something that resembles the world in 'Rollerball'.
3
Mr. Leonhardt writes "Large companies today are often taking advantage of workers, consumers, taxpayers and small businesses." But he provides no facts or data to support this assertion. Are we supposed to accept it as a given, with no support? The fact that more Americans work for large companies, and that US companies in recent years have generally larger, is potentially an interesting fact. But beyond a tendentious, unsubstantiated, baseless conclusion by a liberal columnist, the implications of what this means are unknown. Mr. Leonhardt should do some more homework and then write a follow-up to explain the basis for his quote above and then a real discussion can ensue. Readers should not just take his word for it.
2
Agreed it should be supported by facts, but I'm also thinking many readers have personal experience with these trends and know the results of which Mr. Leonhardt speaks. I do.
3
Large businesses, especially publicly trade corporations, should be recognized as social constructs rather than as private enterprises. They shouldn't be able to hide behind a supposed kinship with small enterprises that depend on the entrepreneurship of individual proprietors.
In particular, long-time employees of public corporations should have rights equal to fly-by-night owners of stock and wealthy executives who take management positions to skim income and strip assets.
Corporate governance needs to be more closely regulated by law to ensure that legitimate stakeholders, including non-wealthy employees, can defend themselves against income-skimming and asset-stripping abuses and can get shares of financial benefits from automation and relocation.
11
Corporations should be given tax breaks for STAYING in the US, meaning keep all of their manufacturing operations in the US, not get tax breaks for moving OUT of the US. If a CEO chooses to move their operations outside the US, their company should pay MORE in taxes. But corporate taxes, should be paid on all monies made regardless of where they "stash it". It's truly unfair (to use Trumps word) for corporations to be worth hundreds of billions, of dollars and pay 10% corporate tax rate. Apple is close to a TRILLION dollar valuation, and they will pay 9%, roughly. Because the money they stash offshore isn't counted as profit even though it is.
https://www.forbes.com/sites/timworstall/2012/11/01/so-how-much-tax-did-...
https://www.ctj.org/the-sorry-state-of-corporate-taxes/
This is where it will get ugly, simply because if they were paying 9% on profits, when the statutory rate was defined at 35%, then they will pay even less given the new corporate tax rate is 25%.
Reagan receives a lot of praise for lowering taxes, but his tax increases are often overlooked. Even before the 1981 tax cut took full effect, under pressure from Congress, Reagan boosted taxes several times: in 1982 with the Tax Equity and Fiscal Responsibility Act, again in 1983 with the Social Security Amendments, and in 1984 with the Deficit Reduction Act. Many of these tax increases aimed to increase federal tax revenue, after it declined following initial cuts.
1
These big corporations, many of which are monopolies can raise prices almost at will. This is in effect a tax they can place on consumers when no alternative is available. Government by the people that is at arms length from business is the only way to preserve the values which our country was founded upon. These are equal opportunity, life, liberty, and the pursuit of happiness. Republicans represent business interests only. They need to be voted out in mass.
16
Such changes in economic conditions are why it is so fraught with difficulty to treat economics as a science and make statements such as "generally, as unemployment falls wages will rise." Such platitudes that economists cite as scientific laws are based on observations of trends over very short periods of time from the past and then extrapolated to the present. But we've gone from an agrarian economy, through the industrial revolution, and on and on and on. Economists need to stop thinking they can create generalized scientific laws off of barely relevant empirical data from the past that govern the present and future. Economic theory is propaganda not science. Corporate masters are in a game to "win" and that does not necessarily mean that they are acting "rationally" as economic theory would hold to maximize profit in the present. They want to run the other guy out of business. They want to break the union that annoys them. They want to destroy those that bruised their ego at some distant point in the past. And on and on go their "irrational" (from economic theory assumption perspective) motives. So I really just wish other columns in this paper based on this data would stop portraying the failure of wages to rise inversely to the decline in unemployment as puzzling.
6
OK, I cry foul!
Your chart "A Quarter Century of Big Business Getting Bigger" ranges from +4% to -4% which is statistically accurate but visually very misleading. Change that scale to +100% and -100% and you will see virtually no change.
Not that I disagree that increasing ownership by large corporations is bad, I object when the visual proof does not realistically tell the story.
5
The writer/graphics people chose a scale that allowed the trend to be seen. Their scale did not create the trend. Your proposed scale would effectively obscure the trend lines. A scale should be chosen that allows the trend to be depicted and the scale is provided so that the viewers can interpret it properly if it is within their capacity to do so. There is absolutely no reason a +/- 100% scale should have been used.
11
We are the Corporate States of America.....
All for the few.......
None for the many.....
The greatest democracy money has bought.
24
We were watching for Big Brother(government) and we got blindsided by Big Bossman (corporations).
17
And to think that Adam Smith, father of capitalism, had called for government action to break up any business that had grown larger than seven employees or so, as it was limiting competition and headed toward being a monopoly. Yes, Adam Smith had heard of economies of scale, big business's usual excuse these days. Mergers' very point is to reduce competition, giving fewer choices to buyers, suppliers and potential employees. At what point will the anti-trust authorities wake up from their long nap?
10
The problem is too much regulation, which always favors incumbents. Is it any wonder that Facebook now wants to be regulated? Or that Dodd Frank resulted in more concentration in banking, not less? Only big companies can afford to deal with excessive regulations.
4
This subject, the health of the economy, the wellbeing of the individual and the distortion of community, for certain requires a full and balanced analysis. And healthy debate. This blinkered, narrow assessment isn't it. We can do better NYT.
4
What is there to debate here? This is where the trend is going.
1
Good work!
Now for documentation on how this came to be please see
https://www.legalreader.com/republican-racketeers-violent-policies/
Stupid question, perhaps, from a non-economist: How then (if not getting bigger) are US companies to compete with Chinese mega companies?
1
how ironic that the nytimes goes to Ro Khanna for advice, one of the politicians pushing for more and more immigration, increasing the supply of low skilled workers which benefits large corporations. we should be getting rid of politicians like him.
2
Watch out for the next thing the Trump administration will wipe from government agency files......"Census Bureau data set known as Business Dynamics Statistics"........ the data Leonhardt used to support his argument.
7
Leonhardt is one of the new breed of journalists who get paid to find ways to recyle information many of us found on our own or in college decades ago.
It's like being talked down to. The over bloated (journialism) media class who orchestrate the country now. Even at The New York Times. Very unorignal and actually inuslting.
4
Remember the old Wall Street saying that although you can make money as a bull or as a bear, a pig becomes a hog, and a hog gets slaughtered.
1
Bigger is not more efficient. The Bigs are the result of people who put distance between themselves and actual production. To succeed, major large corporations require shareholder investors and many, many managers, both classes that insulate decision makers from the actual work of production and service. Each new layering of executives, marketers, p.r. people, lobbyists and others not involved in production lowers the value of work and the value of the product, while raising the costs of living.
6
Amen to this. It's happening in higher education and medicine as well.
Part of Trump's campaign pitch (beside the racist part) was a rant against big business. In reality, no president has done more to accelerate the big business power grab. He has, however, lived up to the racist part.
4
The U.S. is moving inexorably towards corporate statism. Otherwise known as fascism.
2
Mr. Leonhardt, where's the part of your editorial where evidence is provided that bigger companies pay less than smaller companies? The fact that corporate profits have surged since the 1980's while wages have stagnated is not evidence. Profits of what types of corporations? You don't say. And wages may have stagnated at smaller companies also. Why is that data not presented? If you're going to make blanket statements of fact to bolster your case you should back up your "facts."
1
I just want to congratulate David Leonhardt for doing such terrific, interesting work. Maybe it is so interesting to me just because it appears that I share his concern for the topic, but I think this article and the work behind it are a true public service. Pulitzer Time! I am often very cynical and irritated with the Times neo-liberalism, but in this case I am heartened that the editorial board allowed this piece to be published.
5
Job one - politicians WE own.
Not the big corporate donors who buy their own rules in our political system.
Truth: 90% of us want change.
Imagine millions of us using a simple app to make a mass demand politicians could not ignore.
Money out of politics now!
Here ya go:
"We The People 250."
A constitutional amendment that does the following:
1) maximum contribution to any candidate for public office - $250. Applies to any level - city council to president.
2) same $250 limit for "political speech" (if a person or group wants to air a commercial taking a political view, the funds for that commercial, that political speech, can only be garnered in maximum $250 chunks. No billionaire or organization can command the airwaves with massive buys of political speech.)
3) all congressional districts drawn by non-partisan panels. California does this now.
4) no lobbying after leaving Congress. No employment by any company on which the politician voted.
5) full, complete disclosure of all financial holdings and tax records from any candidate and all sitting politicians.
6) automatic registration to vote at birth for citizens.
7) mailed ballots - done successfully in Oregon now. Paper can't be hacked + audits.
8) extra provisions, drafted by experts in campaign finance to cover all other issues.
Our government is not for sale.
Our brave soldiers did not die for that.
We turn 250 in eight years.
$250 limit ammendment.
Our early birthday present to America.
14
This is an excellent list!
Maybe add: president elections shall be limited to one month. Congressional races, to two weeks. (This is roughly as it is in France.)
5
Unfettered Capitalism leads to monopoly, lower wages, higher prices, and lower quality. We've already experienced it, there's ample historical evidence, but no alive today was of an age to remember the 20's and 30's. Because we're in a global economy it just means it's taking longer. Greedy people never learn (and why should they? There's no consequences in this country for breaking the laws), and evidently politicians are mostly prostitutes for whoever has the most cash. Get ready for the next depression folks, along with resource depletion, a warming planet, and despots taking over. It's gonna be HUGE, I tell ya, HUGE.
3
"Unfettered Capitalism leads to monopoly, lower wages, higher prices, and lower quality."
The most efficient check on monopoly is competition, not government.
"Greedy people never learn..."
How much money does someone have to earn before you label them as "greedy"? How did you arrive at that number?
"...and evidently politicians are mostly prostitutes for whoever has the most cash."
No argument there. Great argument to push for term limits in Congress.
Aaaand? Americans love their corporate overlords. Ask them. The Left often uses as an example exactly what "real Americans" love, the corpocracy, to try and get them to see the Left's view. The right ain't givin' up their guns or their 'worship' of Sexist Corporations. The Left believes that facts will eventually win, but they are proven wrong. The Left is wrong because Americans are brainwashed their entire lives by the corporate overlords. How else can one explain Americans buying gigantic vehicles for their giant bodies to go to their giant homes? Their brainwash is to purchase more and more expensive things.
7
And this is something new? New York used to have several great newspapers, now we're stuck with The Times.
2
Big business, the 1% and their Republican enablers are the real Swamp. That is why it is so critical for them to control and destroy government, the only party with the power to stand in their way and restore some balance.
3
When two-thirds of the US population can't handel a $400. emergency no one is winning. What it is, is the new slave labor. Indeed it is cheaper to hire than to enslave. They have it all figured out. Don't even need to care for the workers, let them die. Lord knows there are plenty more. I read the Times every day plus much more and what I come away with is that people are just too stupid and lazy to save themselves or their children. Their children's children? Forget about it.
7
“A government that wanted to reduce the power of big business — through a combination of new laws, better regulation and different judicial appointments — could do so. Here’s hoping we get such a government sometime soon.”
“Here’s hoping”! Really? Is that the best you can come up with? One thing lazy Americans can do is VOTE. But we also need to vote thoughtfully. Something few do.
2
<<Here’s hoping we get such a government sometime soon.>>
How? By magic? Governments have to be bought in this country, and who's going to outbid the people who employ 1,000 or more workers?
Citizens United = Deathblow of American Democracy
4
As usual, the Times does not go to the root of the problem.
The problem is the system. Which is capitalism. Capitalism does not favor the individual and it causes all the negatives you describe here.
Just watch some videos by Robert Wolff and your mind will grow.
2
"The problem is the system. Which is capitalism."
We don't have capitalism, not at least in the manner as was intended by Adam Smith. We have "crony capitalism", an unholy alliance between government and business. Cut the cozy relationship and we solve a lot of problems.
If you don't like capitalism, what would you replace it with - a government controlled economy?
1
Mr. Leonhardt: This is hardly breaking news, big businesses have been getting bigger and creating top line profit(not to mention insane pay packages for executives)by absorbing other businesses for a generation. I would dispute your claim there are any benefits other than to Wall Street who profits from their mergers as they will profit from breaking them up, in between they will profit by initially peddling their shares and shorting them on the way down. To suggest there are benefits other than to the executives themselves (regarding economies of scale)and the necessity to compete with other “behemoths” is fantasy. No less a once worshipped “visionary” than Sandy Weill has offered his mea culpa for delivering such false Gods as Citi Group which ultimately prove to be worthless “cat shi- wrapped in dog shi-“ to papaphrase the expression used by another exalted leader (of Goldman Sachs)Lloyd Blankfein when defining the products they packaged to sell to others as they and their friends lined up to bet against them. At some point most of these pathetic financially engineered excuses for business models require saving by the tax payers or the shareholders. Big business today exists solely for the benefit of the executives and shareholders who are nimble enough to enter and exit at the right time, when there is research done or infrastructure built allowing these vampires to exist it is at the public expense; “Big American Business” is corrupt and throwing Americans off a cliff.
2
The way things have been “developing” , as excellently substantiated in this valuable essay, leave precious little doubt that sooner, possibly earlier than we expect, USA economy , and the world at large , will be owned, manabged and directed by one sole company that that owns, manages and directs the USA , and the world, through a set up of the Koch brothers and the Adelsons.
The tyranny they will impose on all our lives will be far more ruinous than did Communism, as falsely depicted by the USA.kneel down and pray in the temple of the one company domination
,
5
The same people who screech about government control of their lives ("socialism!!") are the exact same people who will give corporations control over their lives ("capitalism!!"). They greatly fear government, which they can vote in or out, but they have no fear of corporations over which they have no control. We can call it shortsightedness, ignorance, or just stupidity, but this is the basic problem and it has been fueled by the Fox/talk radio fog machine for decades.
4
Want to "kill" a corporation? Quit buying their stuff.
We need to clone Teddy Roosevelt.
4
I suggest that Leonhardt and New York Times readers consider addressing this problem at its roots. You can do so by supporting a 28th Constitutional Amendment essentially stating that corporations are not people; and money is not speech. Such has been introduced in Congress where it has attracted 56 co-sponsors: HJR-48. The group which accomplished this, Move to Amend, is working very hard to get companion legislation introduced in the U.S. Senate. Details:
https://www.congress.gov/bill/115th-congress/house-joint-resolution/48
14
Vote Bernie Sanders or at least listen.
1
Seriously? This is just occurring to the op ed writers at the NYT?? Its plain as day obvious to every worker in every industry and has become government policy as the the political donor class cemented their 2 tier society - the 0.10% vs the rest - since the 1970s. The uberwealthy say lets consolidate, buy politicians to eliminate oversight and any kind of regulation, and the banksters say, sure, we will lend you the money. Rinse, repeat.
And Ro Khana calls this a blind spot? Not sure whether this congressperson's lying or naive, but anyone who pretends not to know what big corporations and execs are buying with their contribution dollars is one or the other.
10
Funny how we all know this but it is seldom spoken.
This paper, the NYT, is a supporter of wars, corporations and ‘Bigness’ irrespective of the federal government’s competition laws.
2
Enough of these anti-capitalism screeds. Even Warren Buffett has said his investment goal is to buy companies that have a big moat that is getting bigger. It’s hilarious when Republicans are mocked for longing for a past time when things were simpler but Democrats wax poetically about the era of small shopkeepers who knew every customer.
2
Don't forget the private hedge funds who are buying up productive and profitable American companies, loading them with massive debt, and returning great returns to their investors!
Many of these companies then start to decline under their debt loads and stop investing in innovation. Their future is to be broken up to retrieve their asset value, or just go bankrupt.
Look at what Tesla's brilliant founder is undergoing from investors, who only look at quarterly profitability, and ignore the amazing economic revolution that is happening and being led by Tesla!!
Imagine, Tesla is delivering 3500 cars per week and growing, but greedy investors say..." but you promised 5000!"
5
Small business owners have been the "shock troops" of the Republican Party for decades now. The U.S. Chamber of Commerce gets most of its funding from global corporations while it advises small businesses to support policies that hurt small businesses.
Global Corporations are your biggest competitors, nastiest suppliers, and greediest creditors. Stop supporting policies that let them get bigger and bigger at your expense.
They get tax breaks you don't get, subsidies you don't get, and they are talking you into blaming poor people for all of that missing money.
Walmart is not your friend. Stop protecting global corporations at your own expense.
2
A sidebar to this depressing and real state of affairs is how soulless it makes everyday life. The breakdown of communities and economic duress is very real and this is amplified by the terrifying sterility of strip malls, chain stores, copy cat housing and oceans of identical mass produced products. No wonder we anesthetize ourselves.
4
We're mostly leading McLives. Every worker deserves a meaningful, sustainable life. We all deserve a meaningful, sustainable life as a community.
2
In spite of the propaganda that spews endlessly forth, the truth is that There Ain't No Such Thing As A Free Market (TANSTAAFM). That's because any time an agent in a market sees an opportunity to disturb the equilibrium in its favor, it MUST (according to the theory of how free markets work) do so. The only answer is regulation. And now the antiregulatory foxes rule the market henhouse.
Yeah, too many metaphors, but you get the point.
1
Our government has sold out, literally, to Big Business and most politicians are fine with it because they are there to get what they can for themselves, not to represent us. The selling out of our government started in the late 70s, and then really got going with Reagan-housing prices quadrupled in the 80s! But even some of the Democrats were guilty-watch the documentary "The Heist"-it reveals the disgusting truth of the last 30-40 years.
The GOP, FOX, and Dark Money have successfully brainwashed the GOP base. With such an extreme base of GOP voters, gerrymandering, and voter suppression, it has been nearly impossible for Democrats to control Congress, or win the White House, much less turn the SCOTUS in a more liberal or even centrist direction; McConnell's refusal to hold on vote on Merrick Garland was despicable.
Many Americans want to believe that voting for a Republican helps them but I will never understand why-Reagan did not help the little guy, nor did Bush-they only helped the rich, caused recessions and started wars. The last good Republican was Eisenhower-there are no Republicans like him anymore, so get it through your heads, America-Republicans do not care about anyone's welfare but their own. Their refusal to stand up to Trump's immorality, racism, and sexism is clear evidence of that.
5
Let’s organize a national economic justice parade in every major U.S. city to celebrate America by raising awareness of the capture of our democracy by the wealthy corporate elites and the socioeconomic problems that it has caused. I call it a parade instead of a march because I view the enlightenment of the American public as a celebratory affair. We have allowed the wealthy elites to deceive us into believing it is unpatriotic to challenge their selfish manipulation of our government that has led to our great wealth and income inequality problem. However, the clock has struck twelve on this intellectually dishonest line of attack. The elites on Wall Street and in the upper echelons of Corporate America simply do not care about the majority of us stuck in the middle and lower classes. Their socialism arguments did not stop their colleagues from sticking their hands out and begging the government for billions of undeserved dollars to help them recover from the 2008 financial crisis. We must stop listening to their self-serving pablum and take care of business. We must amicably demand that our government take action to legally wrest control of our branches of government from the corporate elites and equitably distribute our nation’s great wealth to our hardworking American people.
3
Dear David,
What is the optimum size for a company? Who gets to decide and what should their "qualifications" be to make that decision?
The results of this agglomeration of power are evident in the awful processed "food" that fills our grocery shelves and poisons people slowly to death, led by big ag, big fast food, big processed food, which have all effectively co-opted the federal government. I think the term Adam Smith uses is "rent seeking." That is, a business that doesn't seek to compete in a free and fair marketplace but that relies on statutory favor and an un-level playing field created by bribed politicians. And don't forget big guns and big pharma, which are peddling their own forms of public poison. Call me paranoid, but it's hard to believe or have trust in anyone, save the occasional everyday saint, of which I know one...and this from someone who calls herself a free-market capitalist!
2
Capitalism is cyclical and the author does not offer Why this is a serious problem within that context.
I'll offer one, though. Businesses aren't allowed the vote, yet. When some GOP judge decides that they get to vote ala Citizens United, that's when the takeover of our Republic will be complete. We as citizens will then become employees of Big Brother, Inc.
Politicians of all stripes used to care about this, but not any more. The poorer you are, and the less educated you are, the less likely you are to vote. Good for some, bad for our country.
All I see out of business is an amoral concern for the bottom line, and when the economy tanks many of them turn to the public trough for bail outs. And breaking the law? None go to jail.
The system is rigged, but turning to the con-man, trump, is short sighted.
1
Now it's time for unions to organize these big companies.
1
the Big business model must die if we expect to employ more people. FYI While visiting relatives in Clinton NJ, an experienced realtor there said, she did not like the way the (touristy) town was headed. when I asked her to give an example she said, her office is prime real estate in the downtown and that her office should not be there, it should be a shop or something that gets people walking in and spending money. Downtown Port Chester was destroyed when the big box stores moved it. Bethel CT continues to have a downtown with small businesses
1
I wonder if this article has anything to do with the decline in life expectancy and the opiate epidemic in the US?
1
Progressives should not be the only Americans lamenting the growing Blobmonster of "too-big-to-fail." Monopoly capitalism undermines the operating principles of capitalism itself: it undermines market competition, it distorts prices, and it eradicates the consumers as agents of their own demand. Theodore Roosevelt (R) understood this quite well, which is one reason he became known as a trust buster. Lenin understood it as well.
2
The formal definition of fascism. Government and industry becomes one piece. We’ve got it, so now what?
Those charts are probably accurate, but only a tiny part of a growing economy and population, and it’s not news that mom and pop are out of business. However, our technological and industrial history has plenty of examples of the largest corporations totally missing the next boat, sometimes just from excessive inertia, so I still wouldn’t bet that today’s monsters will endure.
Also, there are examples of insane episodes of war restructuring business down to the local level. Insane tariffs could also mix things up, wiping out large entities and creating new ones overnight. Even in fascism.
2
Where is the chart that shows the Trump Organizations personal and family income tax returns and business records profitable occupation of the Oval Office of our White House?
3
Ro Khanna and David Leonhardt are wrong. Individuals do control the destiny of too many millions of people, and those individuals are the owners and leaders of the corporations. “Big business” is a euphemism for the plutocrats who own and control much of the country. Their ability to influence politics, limit economic opportunity for workers and diminish their own tax liability will doom the country. They reduce investment in public infrastructure, which limits our ability to compete with those who are making massive investments in the future of their own societies, principally the Chinese. You need to pull back the curtain and provide a more incisive analysis.
1
It is becoming obvious that the fix is in. Corporations own the wealth, the law, and the government. The people lose rights and money every day. There is no free market in a world controlled by a handful of people who make the rules to make themselves rich and everyone else poor. There is also no talking to people with such power, no petition process that will make the powerful care about the weak. There is only revolution, the use of force to get the attention of the powerful to grant the demands of people who want to live in dignity, of violence to tear the whole system down and start over. I don’t think today’s politicians and businessmen know what they have wrought.
3
I started a small business in California and got crushed by regulations and fees before I could even get started. This is often left out of the conversation. Most businesses exist along the coasts where regulation, taxes and government fees are higher than ever before, way more than it was for our grandparents and great grandparents. It is impossible for small businesses to survive all of the government imposed on them, only large companies with deep pockets can manage. This happens in every field, farming, media, retail, rental housing, etc. People continually vote for more regulations, more government, more taxes and then cry when small businesses can't survive it all.
I've had a couple of small businesses, including one in CA, and regulations and fees weren't particularly burdensome, but they were sure hard to find and understand. I think there could be a massive simplification in the government-business interface without giving up any of the protections that regulations provide. Like an ombudsman.
(1) This is all so obvious to anyone who has been paying any attention. Big corporations can do it better than little ones but they are out of the control of the people they serve. Rather, increasingly, they control the people through decades of psychological research and technological development.
(2) There is a bigger picture here of tax policy and kind of government. As a liberal I believe government is all the people have to counter the power of the wealthy. And a huge part of the Republican platform has been the destruction of government. We will never have good governance until our election process is fundamentally changed from the free-for-all (pay-to-play) anything goes (almost) to a completely public funded and regulated and refereed process similar to a sports event - with a level playing field of ideas.
(3) Let me be more clear: Make taxes progressive again like when the middle class was built. Distribute the taxes to the people via government funded programs that allow intelligent application of resources - such as the market place, on its own, is not built to provide. Businesses serve individuals. Government serves the society.
(4) Otherwise, America drifts further and further into a bifurcated society of the wealthy representing humanity going forward while the 99.9% become bipedal consumer cows without a safety net. Can't make it? Die! It's not about us. Its about them, the super wealthy.
3
I smile at these big companies' leaders who care not one single bit about their fellow human beings. They are as vulnerable to a fatal disease as anyone else and they will live no longer than anyone else. When are they going to come out of their executive offices and experience life? As it is, they are getting more and more scared and shielding themselves more and more. For what? I don't care one toss about them, in the happy knowledge that I am a happier man with more friends and more love around me than them.
1
Excerpt from Bill Moyers...
"How America Became a Society For The 1%"
"From the Republican war on government to the Democratic Party’s shameless obeisance to big corporations and contributors, this “law of nature” has served to legitimate the yawning inequality of income and wealth, even as it has protected networks of privilege and monopolies in major industries like the media, the tech sector, and the airlines.
A plethora of studies conclude that America’s political system has already been transformed from a democracy into an oligarchy (the rule of a wealthy elite). Martin Gilens and Benjamin Page, for instance, studied data from 1,800 different policy initiatives launched between 1981 and 2002. They found that “economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy while mass-based interest groups and average citizens have little or no independent influence.” Whether Republican or Democratic, they concluded, the government more often follows the preferences of major lobbying or business groups than it does those of ordinary citizens.
We can only be amazed that a privileged faction in a fervent culture of politically protected greed brought us to the brink of a second Great Depression, then blamed government and a “dependent” 47% of the population for our problems, and ended up richer and more powerful than ever."
Our nation is not great....it's dying, gasping for its last breath.
7
Perhaps, Jospeh Schumpeter forcast for capitialism will hold up. As businesses grow larger, fewer and fewer citizens will have a vested interest in the capitalist system. We will then move ever more towards a more socialist economy.
4
Economy, like politics, is in a sense like a circle. On top of the circle you have left and right, or socialism and capitalism. If you go further and further out to the extremes, you will find yourself at the bottom of the circle where they both meet again. There was for instance not much difference between Hitler & Stalin, and a full socialism will make the government the owner as opposed to the capitalist few bosses who run & decide everything...
Might I make the suggestion that the phrase "job creation" be banned from business discourse? Every reference to it seems intended to glorify business in a deity-enabled way. Businesses do not "create" jobs,, They simply pay the minimum amount possible to the smallest number of employees that can still produce the highest profit margin. If that requires more employees (or fewer) business very quickly adjusts the headcount to balance the equation. That's a far cry from creating the heavens and the earth.
12
The basic goal of a good capitalist is the elimination of jobs, not the creation of them.
2
Yet another demonstration of how bogus the politically useless equation of Wall Street vs. Main Street has always been. "Most American businesses are small businesses." As if the local dry cleaner or convenience market has ever been the dog rather than the tail. Meanwhile, POTUS, forever trapped in the last century, focuses on rescue and subsidization of legacy industries already left in the dust by globalization, automation, pollution, etc.
6
Domestic and foreign income. The Apple saga speaks volumes. The new corporate tax cut does nothing for wage earners. Its a big wet kiss to people like Trump, the large banks and Apple. Apple escaped to Ireland but the EU wanted its taxes paid. Now the Rs have turned the US into a tax haven. Apple is seen as a success story of the tax cut. So large corporations make a fortune off the tax cut and the stock market would be soaring ever higher if Trump weren't in the process of launching a major trade war with the rest of the world.
4
There is no free market, if there ever was. The more big businesses are allowed to swallow up small businesses the more inequality rises. If one points out that the market needs to be regulated for the good of all, then one is called a socialist, as if that is the worst possible thing that could happen. The so-called free market is spoken about as if it were a law of physics, or a edict from God. It is a falsely-labeled invention of the rich, by the rich, and for the rich. Do not mistake what I am saying. I am not for the government owning all means of production. But government has a place in making certain that people with no ethics and an overweening lust for power and money are not allowed to ride roughshod over the rest of us.
18
When big businesses can control supply chains, exert economic influence on prices to the detriment of other businesses, buy and sell our elected officials and various cabinet secretaries it's called corruption. When they can force employees to sign arbitration and secrecy agreements in order to be employed it means that there aren't enough jobs that people can simply walk away and find another. And when businesses can demand that people work unreasonable hours, work without any protections at all, lie with impunity about why employees are hired, fired, paid, promoted etc., they are not businesses. They are rackets and perhaps they ought to be treated as such.
19
The worst part is that BIG business - controlled by the International Mafia Top 1% Global Financial Elite Robber Baron/Radical religion Good Old Boys' cabal - takes away OUR choices.
Funny, the same "communism" that republicans and other "conservatives" blast is now being administered by predatory capitalists who are not regulated. THEY will destroy us and OUR lives if we let them.
It is time for a new model of business in OUR United States and the world where every employee shares equitably in responsibility, decision making and profit. No outside "Robber Baron investors" to siphon off the profits and rewards of OUR hard work.
It is time for serious, enforced regulation to break up these behemoth companies that would try to run OUR lives. The majority of Americans do not want the world they envision. Time for 99% tax on inherited wealth.
NOW.
7
"Time for 99% tax on inherited wealth."
So, you have no problem with government being "greedy" and taking something that doesn't belong to them. Care to guess how many wealthy families will just simply move to and establish residency in another country?
1
Been here before. In late 19th, early 20th century big business colluded, combined in a frenzy. Opposition gelled in 1890 Sherman Act & 1914 Clayton Act. In these, debates, and 1912 campaign speeches, something is clear. It wasn't consumer impact of monopoly that concerned people. It was impact on government & wages.
Sherman appreciated Madison's theory of competing interests, designed in checks & balances. Regional business captured gov't, inevitably. If regional interests compete, they prevent each other's worst selfish efforts. If one dominates coast to coast, like Home Depot or CVS, a sector has one selfish voice. Look to Glass-Steagall history. Until Rubin & Greenspan broke barrier 'tween consumer, Wall St. banks, those 2 sectors fought to keep the other from its resources.
Wilson argued market control led to gov't control. Until his admin, state legislators picked Senators, sans elections. Those controlling the most resources got their man. Think Citizens United.
Standard Oil drove down railroad, muni wages the way big box stores do: control markets. What if Standard hadn't divided. Exxon/Mobil would be E/M/Chevron/BP America/Marathon/Pennzoil/etc. Climate Change policy is bad? It'd be worse. If Exxon & Mobil were separate, it'd be better. Power corrupts, monopoly power corrupts ...
ATT: Google of its day. A shockingly new technology gov't was afraid to break up. Instead, regulated it like utility. Worked for 50 years.
Do we have courage to do the job again?
8
The U.S. government granted monopoly status to Alexander Graham Bell and his telephone well into the late 20th century. Sears was the biggest retailer into the 1970s until K-Mart. Then WalMart came along and all the angst about how many small businesses were displaced/eliminated. Now Amazon threatens WalMart and WalMart is expanding into online sales. The internet has changed commerce, mostly for the better. Who wins from all this evolving competition? We do.
1
I own a small forestry company. I pay 22% in federal income tax. A large forestry company (Weyerhauser) with billions in revenue pays 0% federal tax. No big mystery why small business cannot compete. Theft.
32
Unfortunately, small business people keep voting for Republicans who keep making policy that helps global corporations, at the expense of small business and small farms.
1
Take a look at the airline industry which has morphed from an industry that served passengers to an industry that serves itself.
Once Upon a Time you could leave the East Coast early and get to the West Coast by 10 or 11. You could fly out from the West Coast mostly after your business day and still get back around Midnight.
Not any more. Airlines have worked out that they can not only make it really difficult for business passengers but they can charge as much as they like.
And with no competition and little regulation who is to stop them?
My phone company just "decided" to raise my rates 5.00 a month on each line. Not much recourse. They do as they choose and I have almost zero options.
It's appalling as an employee but as a customer not only is it horrible but I'm expected to pay for it.
21
"Take a look at the airline industry which has morphed from an industry that served passengers to an industry that serves itself."
That same argument was used in the 1970s before deregulation. Here's an interview between Phil Donahue and Milton Friedman in 1979:
https://www.youtube.com/watch?v=1EwaLys3Zak
Start watching at 13:50 in the video to get the airline discussion.
The whole video is great, and though it was made in 1979 many of the issues discussed are still relevant today.
"My phone company just "decided" to raise my rates 5.00 a month on each line. Not much recourse. They do as they choose and I have almost zero options."
How many wireless companies can you choose from?
I always marvel how on one hand, Big Businesses say that their best assets are their employees yet whenever a large corporation says it's going to lay off swaths of employees, the stock soars.
12
This trend is inevitable and it’s up to our incumbents to change it. The advent of Artificial Intelligent will make the matter worse. Big companies with their monies will develop AI technologies to automate all their business processes as a result, they will hire less and fire more. This is already happening with technologies from big tech giants. Tesla, Google, Uber, Apple are developing self-driving vehicles that will replace all drivers. TurboTax is already cutting accountant’s businesses.
6
Thanks for this article which takes a fresh approach to analyzing consolidation in the labor markets.
I hope you receive manu useful and helpful leads to other sources of relevant data to help you flesh out this picture.
On the issue of political consequences, what does this do to the oft-repeated mantra that small business is the well-spring of job growth, when that well is being squeezed dry?
Economically, what impact does such massive consolidation have on innovation needed to propel the growth of new jobs outside of old, dying businesses?
7
The reason for this trend is probably increasing regulations and information technology costs that hinder small business. Scale helps larger enterprises.
2
I suspect that the problem with regulation is more complex than simply too much of it. Too many regulations place a burden on honest people without curtailing the activities of cheaters. IMHO, we don't need more or less regulation, we need better regulation, which curtails cheating but places less of a burden on those who do not cheat. Unfortunately, the large corporations have better lawyers, and any regulation to slow down their cheating will stifle smaller organizations.
The idea of choice, competitive pricing, any kind of power or voice for the individual consumer, has disappeared. And its not just media or telecommunications. It’s created a long run of huge profits for titans of health care, but less and less affordability or quality for anyone but the wealthy or a corporate employee—until they lose their job.
8
What this opinion fails to mention is that by and large big business are much more likely to provide worker benefits like health insurance.
I agree that the consolidation of power across many industries forces out innovation that doesn't fall within a pre-existing framework: that does not mean we should not recognize it may have benefits too.
2
Bingo! You've hit on the very reason that big corporations gracefully accept their mandate to provide health insurance. It gives them control over their employees. Otherwise they would lobby the government to relieve themselves of this burden. If not for this motivation, they would be the biggest proponents of a single-payer system.
15
Well, big business is more profitable than small business, so it's always going to win out. The economies of scale alone give it a considerable advantage, and the way in which profit compounds into more profits and investment compounds into more investment means that bigger businesses grow faster too.
Just as the rich make money faster than the poor, big businesses grow faster than small businesses. Just as the rich get more opportunities than the poor, big businesses get more opportunities than small businesses. Just as the rich hold more political power than the poor, big businesses have more political power than small businesses.
So why is it that we're talking about propping up small businesses and protecting them from the power of big businesses, but we're not talking about helping the poor and protecting them from the power of the rich?
9
Stock buy-backs, wage suppression, mega mergers, layoffs, outsourcing to low wage countries, etc. All short term profit strategies that lead to weakening a customer-consumer base that all these corporations depend on. Good luck on artificially keeping those stock prices high in the future. In fact, good luck on staying in business period the next time the bottom falls out (probably worse than before because of these self-destructive policies). More taxpayer funded, debt-ballooning bailouts anyone? These are signs of a dying system that is artificially sustained on economic life support (i.e., borrowing and debt). Borrow money for those mergers, borrow money for those stock buy-backs, borrow more money to run the government (got to have those tax cuts), etc.
13
First, for all their talk about the importance of small businesses politicians, left and right, are in the pocket of big business - the very people who fund their campaigns and who spend enormous amounts on lobbying. Second, the complexity of government regulation - safety, health, environmental, employment, taxes, etc. - gives big businesses, which can spread the costs, a big advantage.
7
We could use more information about how the growth of big business is destroying the fundamentals of democracy. For decades now politicians have been the middlemen between their corporate masters and government.Trump's election was a way of getting rid of the middleman--letting business openly and directly control our government. This can't end well.
14
The subtext of this piece is that the average employee is going to lose as companies get ever larger. In its pursuit of profits, these large companies will shed excess personnel as much as possible, and look for ways to streamline operations. This spells potential unemployment for both white and blue collar workers, which is likely to be prolonged because these former employees have fewer other opportunities to pursue; competitors have been gobbled up. In the end, the only people who likely will benefit from unabated merging will be well-placed upper level management and shareholders (assuming that bigness does lead to higher profits and, thus, higher stock prices).
It's no wonder, then, that entrepreneurship is the new buzzword in business schools and self-help workshops. Being in control of your own employment fate is better than ceding control to a heartless giant.
7
Except, when Walmart wanted to move into small towns, the local small business entrepreneurs greeted them with open arms because of the business they would generate.
Then the small business people stopped going to each other's stores because Walmart was cheaper, so all of the small businesses went out of business and now those entrepreneurs are Walmart associates waiting to get laid off in the next restructuring.
The Republican Party (and Democratic centrists) keep making policy aimed at making global corporations happy because they make the big donations.
Small business people keep listening to "government is the enemy" propaganda, not realizing that smart government regulations level the playing field so that small businesses can compete. Once small business people have drunk the cool aid, then they support legislation designed by, for, and of global corporations, that hurts small competitors by design.
Adam Smith was against this kind of thing. His invisible hand was meant to play out in small towns between small businesses with apprentices. He was against "rent seeking," which we now call "the profit motive," but no one that quotes Adam Smith actually reads his book. They just go on and on about economics 101, without realizing its economics 701, 730, 740..., etc. where economics talks about how things really work
Stop listening to corporate politicians and lobbyists as if they are anything more than salesmen selling you poison as the fountain of youth.
1
My whole professional career has been joining startups when they were under 100 people and growing with them to 1,000 or more. Somewhere around 1,500 employees the "spark" leaves the building.
Most often it's a new "experienced" senior management team and a thick book of HR and Finance rules. Bigger is better until that point. More resources, more impact on the market. Your customers are no longer just "early adopters" (paradoxically large companies with money to risk) but "main street".
When you "get to a thousand" your salary approaches market value. Working for a startup usually involves a pay cut, and only a small percentage (15%) ever see an IPO. If your private company is bought, a few principals get parachutes, the rest get to bail out of the plane with their belongings in a cardboard box.
8
I guess this puts paid to the mantra that "small business drives the economy". I think the franchising of small businesses disguises the destruction of indivudal entrepreneurship. E.g., fast food outlets are supposedly independent businesses, in the under-50 employees range. But the owner of a fast food franchise is not an independent entrepreneur, they are utterly dependent on corporate decisions. Franchising is a method of shifting the risk from the corporation onto an individual.
7
This is a constant reality of 'capitalists." It was true of the Robber Baron era. They extolled the virtues of markets and competition and then found them wasteful and mess. J.P. Morgan and others engineered merger after merger. Part of the trouble is people, especially the media, takes these business leaders' words as truth and don't look at the reality of their actions.
7
My request to Mr.David Leonhardt just to take up the case study of one American Giant, namely DU PONT and one British Giant namely,ICI- Imperial Chemical Industries -the contribution of these two multinationals in many fields viz: inventions,patents,industries, process modification and expansion,investment, turnover,the number of employees
all over the world. When compare their diversification and number of employees all over the world in 1960s and 1970s with 2000-2018 they made few of their units redundant in many parts of the world, virtually disappeared their brand by selling to local industrial houses but expanded in key areas where they could have an edge to thrive. In terms of profit and turn over DUPONT and ICI might be still conspicuous but the sheen of expertise when compare with their competitors in EU, Asian and Scandinavian. Big business tend to swallow small business, grow bigger by diversification and then shred
its units to the existing small fish whenever it faces slump in business. One could see the diversification and disinvestment alternately. Instead of saying, Big business is winning, I could say that 'Big business could thrive by absorbing the small businesses struggle to survive' and 'Big business could divest the holdings to the small business survive when it diversifies in a new area'.
1
Too late! Corporate America already owns us. You have Republicans who blatantly attack the middle class and Democrats who quietly acquiesce.
10
To David Leonhardt: Thanks for all your informative articles. Here's an idea for one that I haven't seen: Big business always justifies their mergers with the argument that the merger will lower prices. Can the Times look into whether this is true or just another one of big businesses lies?
10
Problem is you can see everything crumbling in front of you and there is absolutely nothing you can do about it.
The slide began with Ronald Reagan, Hero to Republicans, George Bush the second with his cronies like Cheney destroyed the whole country and the world and Trump the current Republican President will seal our fate.
Democrats will be blamed and they will accept the blame.
No, the so called exceptionalism is dead.
6
Corporations are people too.
5
When you have an ax to grind, I guess the whole world looks like kindling. Leonhardt, can see this merger as a new opportunities to oppress.
He seems to willfully ignore the fundamental economic principle of "economies of scale". Potentially, a bigger company can be more efficient, change less, and serve its customers better than a smaller company.
1
Charge less? You mean like Big Pharma?
1
Sounds like the monopoly stage of capitalism.
11
"Since the modern merger era began in the 1980s, corporate profits have surged, while family incomes have stagnated and income inequality has increased."
I always marvel at the way liberal economists like Leonhardt and Krugman manage to see reality, yet are unwilling or unable to spell out its meaning: what is described in this article is the inherent and necessary logic of... capitalism. Capitalism does not work any other way.
Leonhardt's wishful thinking notwithstanding, capitalism (the pursuit of profit for its own sake) can be "fixed" for a while but, like weeds or cancer, it will always recur stronger and more devastating.
And it will eventually destroy us by destroying the environment, unless the people finally take their fate into their own hands.
6
How about a graduated income tax for corporations?
6
Eisenhower did that and he was a Republican.
His tax on wealth went up to over 90%.
How do you like them apples?
But that was a half century ago, back when Republicans were humans, not Trumpbots.
1
We needed a chart? Just look at your paycheck. It hasn’t changed.
4
Great analysis. The antitrust plank of the Democratic platform should be much larger. The Democrats will probably ignore this hot, populist issue, just as they ignored offshoring until Trump (and Bernie Sanders) stole the issue out from under their complacent noses.
6
Big fish eat little fish.
Always have, always will. We can fight against nature, but it's necessarily a losing battle, e.g., I tried to open and run a small bookstore. Ha, ha, joke's on me. A little fish cannot get the large-scale discounts of a big fish, so I was soon swallowed up.
Was forced to be a wage-slave for a very profitable and huge call center, where, on its entry door, was a sign reading "All hope abandon, ye who enter here." So I did. Work indeed became a curse. Now that that awful chapter of my life is over, thanks to retirement, I feel like I'm a cancer survivor. Nevermore.
4
Er, it's pretty difficult to compete on an uneven playing field: The big book chains could get books much more cheaply than us little guys; and there's not a lot of margin in that business to begin with. It's like trying to play tennis with a ping-pong paddle.
growing up in illinois in the 60s we had bell telephone..... which begat bell labs one go the great early research and development laboratories that pre dated silicon valley. but? as efficient and fair as bell telephone was? it was decided that it was too big and by court order it was broken into pieces. guess what? service did not improve. we missed "ma bell"...... i don't think anyone will ever miss comcast or AT&T.
2
Wonder if your vote for Trump (Russian influenced or otherwise) has helped or harmed actual living and breathing Americans? Wonder no longer.
Big business is winning because Congress has given free reign to rabid wolves in the hen house.
5
Time to re-read Louis D. Brandeis on the effects of concentrated money on democracy.
16
The charts show how the big business is winning?!
Not the charts, but the common sense…
It strongly indicates that not just the big business is winning but America is losing.
That’s why the global corporations are extremely profitable while the US federal government is in the colossal debt.
The prerequisite for the US government to be in black is to properly tax the global corporations.
Have you ever wondered how the Beijing government has the surplus of cash while the Chinese economy is growing at the fastest pace in the world?
Of course, those facts do challenge the very mantra of our most prominent economists. That’s why they refuse to acknowledge or discuss them.
In their minds and the columns the truth does not exist…
9
I have written this numerous times. It's no longer the U.S.A.. This country is now officially the Untied Chamber of Commerce of States of America (UCCSA).
Repeat after me: It's all about maximizing shareholder value. Why do you think so many products and services have become scams or Mafia-style shake downs? People seem to believe that these benevolent corporations are about "job creation," or serving customers. The fact is, they are driven by maximizing shareholder value. That's it. Forget about jobs. Forget about "social responsibility." Forget about customer care. Examples abound: Take a trip on a plane, or purchase a house or go to the doctor. Even education has become a huge scam. When you enter these economic vortexes you are confronted with what appear to be "choices" when, in fact, you're being fleeced. And then, when you have financial problems, there's another layer of vultures to pick your bones clean (the attorneys, collection agencies and other "legal" loan sharks.) It's a game, and unless you are very wealthy, or connected you may enjoy the "fruits of capitalism," but Americans are still a people very much in debt and beholden to their notion of capitalism as a religious salvation.
14
Mr Leonhardt, there is a old adage related to statistical analysis that says correlation does not always mean causation. Is it not also true that large companies pay higher salaries than small businesses? Statistics from the census bureau show the following. The average pay per employee for very small business with 20 employees or less was $36,912, according to the research. For small firms with 20 to 99 employees, it was $40,417. At medium-sized firms it was $44,916. And at large companies it was $52,554. So much for you worthless statistical analysis. If you want a bigger salary go to work for bigger companies.
Is that arithmetic average, or median? After all, the larger the corporation the larger the difference between the frontline worker's pay and the "executives".
5
more fake news masquerading as fake news, Americans , for the most part are the most affluent mass civilization that's ever existed.
We will certainly not get a government to rein in big business as long as republicans get elected. Democrats maybe, but not for sure.
2
For Mr. Leonardt and his colleagues at the NYTimes who believe that the way to improve public education is to commodify it so that it competes in the marketplace, here's what to expect in the decades ahead: Amazon.com (or Walmart) Public Schools that employ thousands of teachers and answer to shareholders and executives in a faraway city will soon supplant your local public schools that employ 50 or fewer teachers and are beholden lo local voters who elect school boards from citizens in their community. If you don't see this happening, you aren't learning from the trends Mr. Leonardt describes in this column.
6
Is anyone concerned about the raw data behind the statistics quoted and created in this article? Let’s see: the chart looks at “Change in share of U.S. employment by size of company, 1989 to 2014,” although the timeline on the chart begins in 1984. The percentages are actually quite small: around 3% more persons now working for the largest companies. But the raw data, ignored in this article, is that the US population was 246.8 million persons in 1989 and 318.6 million in 2014, a 29% increase in the population. Based on those numbers, more people than ever before are working for small companies. The GDP went from $5.6 trillion to $17.4 trillion, over 300% larger. If the price to pay for a tripling in the GDP is a 3% increase in the proportion of persons working for larger companies, is that a bad thing or a good thing?
3
I’m not sure that I buy these numbers. The largest company I ever worked for had 200,000 employees. The smallest had 20. I’ve seen organic growth, accretive growth, mergers and aquisitions, divestment, downsizing, layoffs, closing of business lines, and outright failure. I’ve also seen a lot of public sector growth, shrinkage, and payroll-reduction-by-outsourcing schemes in the various jurisdictionsI have lived in. It’s not even clear that public sector employment and contracting are included in the author’s data set.
A few percentage points don’t mean very much here. Worth a look, maybe, but probably just noise.
There is an easy solution to the problem which doesn’t require abandoning free enterprise or any radical restructuring of the economy. All it takes is three to five large companies in each market segment to compete instead of one or two. Large companies don’t like to compete because it keeps profits down.
3
Small companies are small for a reason. They don’t have widespread consumer appeal. Size alone does not guarantee success, rather success will lead to size. The biggest buggy whip manufacturer in 1880 lost out to the smallest auto maker because people wanted cars not horses
This is over-simplified. Sometimes small companies are small because the owners don't want them to get too complicated or don't want to take on the risk of a growth strategy. Sometimes because space limitations would require moving to another city or state, and the owners don't want to do that. Sometimes because product quality is a real point of pride for the owners and they don't want to see that change.
The assumption that a robotic avarice and a blind focus on the bottom line are the default motivations for human behavior is the reason that academic economists so often miss the real story.
Or, as in this case, only begin to understand the story 20 or 30 years after the fact.
2
Competition is More Important than Size
Enforcing a copyright or patent in the courts has become so expensive and risky that individuals sell their rights to large corporations. Congress has pandered to powerful sectors by expanding protection to ideas (i.e. computer software, architectural design). The U.S. expects other countries to obey U.S. laws and vice versa. Developing countries are economically better off refusing to recognize intellectual property and copy what they can. Every businessman in his right mind respects China’s right to pick and choose rather than sign on to international treaties.
Modern big business is simply the sum of its intellectual property rights. Most of the property is digital and could be copied by a competitor with ease. Keep in mind that copying is not now, and never has been, stealing; because the owner loses nothing apart from its monopoly.
The last thing any big business wants is free trade if the government is willing to give it a monopoly. The tariff wars are little more than an effort to balance the estimated market value of infringement with a tax on traditional products and raw materials.
A better system of free trade would reciprocally eliminate tariffs, and price infringement or copying based on some declining multiple of the cost of invention. Complex intellectual property litigation would not be necessary. Best of all, the pace of progress would increase geometrically with competition rather that arbitrary monopolies.
4
Hold on, I'm counting on increased corporate profits to fund my retirement, especially after the GOP takes an axe to Social Security benefits.
1
That might work for David but what about the people younger than David. Can they make enough money in this economic status to buy enough stock or mutual funds to fund their retirement (without Social Security)?
1
Good luck with that.
I'm surprised that the author doesn't mention the awesome power of the ability of big businesses to fund lobbying efforts to get political support for their profit goals. Citizens United was a big step toward supporting big business' increasing role in our government and in our economy. To the detriment of workers, small businesses, and the individual voter.
7
Of course, you overlooked "big businesses" ability to destroy Conservative values as well. How many large companies pander to the progressive element of our country? Even when it hurts their bottom line.
Make no mistake about it, I am for less government not more. I just find it fascinating that this author who advocates for boycotts and corporate citizenship is decrying "big business".
Back in the 50's and 60's, large firms also provide pension plans for workers. They spent a great deal of effort in community services such as helping build hospitals. Those kinds of corporate programs have gone by the wayside. k
6
"A government that wanted to reduce the power of big business — through a combination of new laws, better regulation and different judicial appointments — could do so."
And which of our two corporate-owned parties would have the wisdom and the courage to risk the ire of their owners?
It used to be the Democratic Party but now that the Clintons, and then Obama, moved the party to the right on economic policy, the working class has had little political representation.
But still the DNC, the DCCC and the Times keeps doing their best to boost centrist candidates and policies.
3
And who provides the majority of campaign funds for politicians running for office, buying their way into congress and the executive branch? That would be some interesting research to compile on top of this. The average Jane & Joe don't have a chance. Ours has become a country of super rich and everyone else, and the super rich have all the power.
8
I wish more people would investigate prices and service offered by big business as opposed to small, local businesses. I have found over the years that I get either the same price or a cheaper price from small, local businesses in many cases. My local hardware store has the same prices on the same items as the big box stores, and on large items they will deliver for free at my convenience. Where I live I have found that the independent pharmacies have much lower prices on prescriptions and the service is far superior than the chains. One prescription I have costs $50 at CVS and $10 at the independent pharmacy right across the street. They also deliver. This is not true all the time, but often enough that I wish people would change their mindset and give the small businesses a try. We are being strangled by big business up to and including the fact that they are unelected representatives who are running our government.
5
Excellent point. Small business owners tend to respond very quickly to price competition. When I buy books I browse online and in the big stores and then ask my local bookshop to order my picks for me. They're more than happy to do so.
2
Economies of scale provide benefits to the workers in stable pay, health benefits, vacation benefits, bonus plans, retirement plans, tuition assistance plans, HR Departments and adherence to more DOL fair labor laws, position growth, stock options, FSA/DRA accounts, relocation opportunities, ESPPs, and a host of discount benefits such as cell phone, health club, shopping etc.
Big certainly has buying power with the downside of losing personality and home town feeling. I've worked for small companies and had fewer benefits, lower pay and less certainty of continued employment but now work for a 60,000 employee company. I think I'll continue working remotely and advancing my career for the next decade before coasting into retirement. Cheers
Consolidation and stratification are the natural end points of a non-expanding system. Success begets more success until a few giant organizations own everything. I suppose you could design a society to prevent this, but then the successful organizations will claim that it is their natural right to keep what they have won according to the rules of the game. Any other position is decried as socialism or communism, both words that have been intentionally demonized to prevent such efforts.
The game of Monopoly was designed to demonstrate this reality; players either expand their holdings or are eliminated, until in the end, one player owns it all. The board game ends at that point, but the "real' game most likely morphs into something resembling Rome under the emperors, or collapses from some combination of internal or external forces.
What we are seeing now is the power of the powerful to influence the rules to increase their power. Activists and those parts of the government that are still independent can work to slow it down, but the pressure will be unrelenting. This is a battle that has been fought before, and any outcome is possible.
6
Compelling argument. But our government is owned by big business. I don’t see that changing in my lifetime. It would be naive to think otherwise. And this isn’t applicable to just the GOP.
3
I'm a Conservative, but I can't help feeling you're right. What concerns me, however, is that there are tangible efficiencies being generated by these mega-companies. I love my Google Pixel, Google Home (linked to WalMart online shopping), GMail, YouTubeTV, Google Music, etc. I love how my Amazon Prime subscription get me discounts at Whole Foods, free streaming, free shipping, and literalyl anything I could ever imagine on my doorstep in two days, etc. But on the other hand, how do I balance those benefits against the costs the author speaks of, not to mention the disproportionate political power wielded by these mega-corps and their lobbyists? I think we, as a country, have to make a tough choice: (1) real tangible efficiencies (+ the baggage that comes along) or (2) breaking up concentrations of power (- the efficiencies). The answer: I have no idea.
1
Colin in Virginia, yes the Citizens United decision has had a significant impact on big business relationship to politics.
2
"Monopoly Capitalism." Who said that - not one of the Marx Bros.!
Mercantilists relied on government issued charters; Smith warned about business in competitive environments attempting to combine to "restrain trade." If every industry has only two firms, each would try to eliminate the other. That is what is truly meant by competition. Darwin wasn't thinking is a vacuum.
If "trusts" were not the natural order of things, there would be no need for anti-trust legislation. Even when the US was to a large extent closed to world trade in the late 19th century, the "trustification" of American industry was the norm. Robber barons couldn't exist without monopoly control.
Now that "competition" is on a global scale, every corporate entity insists that it has to acquire or merge in order to "compete" - another contradiction in the rationale for capitalist enterprise. Didn't Clinton eagerly buy into the specious argument that derivatives, deregulation, etc, allegedly were needed to help those poor little US mega banks to compete globally?
Other than engaged in niche production of goods or services, small companies that innovate are merely the targets of large ones with big appetites. It's just "doin' what comes naturly."
2
It all starts with money in politics. The bigger the business the more cash influence. I see nothing inherently wrong with large efficient business, there are many upsides. The huge downside is their essential ‘ownership’ of the government. This is an indictment on the Congress and the obsession with the election cycle. To say nothing of the almost criminal blind eye being turned on the worker. Only in America on this scale.
6
Reply to Gary of Loveland.
"Small business has been the core of America." Not any more. Yes, it's part of the "life cycle" of business, but the bigger fish always eat the smaller fish. Bigger will always win out and that's how unfettered capitalism works. The advantage of smaller fish is that they are more nimble, but they will not survive unless they are either viciously aggressive or willing to bend the law to get bigger.
Bigger is not always better. It's just bigger and better able to exploit resources, which they will always do to their own advantage. Look at what's happening with the new tax law. Big corporations are buying back stock with their windfall and not keeping their promise of helping employees. Bigger business, bigger promises, and bigger (potential and real)lies.
Relying on small business to save this country is a myth that works to keep people hopeful and under the thumb of big, capitalistic business. It plays well in some places, but it's part of the lie that regulation is not necessary--regulation is absolutely necessary. Look at the facts presented here. They will speak louder than the lies if you just listen.
8
I chose employment in a large company over employment in a small company for one reason: much better health care. I think universal, single-payer, government-run health insurance would help loosen the grip that big business has over our economy.
14
Amen! Everyone needs to have access to health insurance and care, not just those who happen to work for big companies.
4
The CEO's escape responsibility by paradoxically arguing that they were unaware of illegal practices because they can't be aware of everything in a company their size. The rich get richer , and immunity.
People should remember that the Tea Party bloomed with the failure to indict little less prosecute even one banker in the Great Recession. Hilary Clinton refused to reveal her fee for her speaking engagement to Goldman Sachs ; she was perceived as part of the problem rather than part of the solution.
5
While it is certainly important to be able to view the data on how hugeness in corporate culture has and does change everything in our nation from job loss or creation, to taxation rules, let us keep in front of our thinking at all times the toll that large corporations take on the environment: carbon emissions, pollution of our water table and above-ground water ways, air quality, and use of non-renewable energy sources. Drastic global climate changes are the symptom our ill planet is exhibiting following long-term business practices taken by small to large corporate use of carbon-based fuels to manufacture, package, and move myriad products on which they make the profits that allows business expansion.
3
One of the most pertinent pieces we've seen in the Times--and such a great, thoughtful series of comments. Many of the comments wouldn't have been out of place in 1968. Great discussion of the ideas and values that might sustain us in working for and demanding lives for all Americans more sustaining and sustainable than the McLives we're forced to live now.
6
Large corporate entities have passed many small countries both in dollar flow and population. Dreaming that some sovereign entity will control them is perhaps a quaint memory. Money is useful. Any money. It is exchanged based on many factors. Not all of them based on the sovereign powers, with or without the MIC. The WWW code drone warfare is fought between small teams of well trained personnel. No one man wonder has yet to reign supreme. Nor is one likely to in the near future. As access to the WWW network gains power from the larger population, it also has larger command and control issues. Big Brother is coming, but not necessarily from a large corporate structure.
2
"The obvious conclusion is that the American economy is too cosy for incumbents." -The Economist
There's our problem. Politically, the economic environment is only becoming more amenable over time. On the right, Trump ran on a populist platform which included fighting special interests. Not that anyone should have believed him but the evidence shows he has clearly done the opposite. On the left, Democrats shouted down the only platform openly hostile to corporate power. Whether or not you believe Clinton is in the pocket of US millionaires, she was perceived as such regardless. There was never going to be any aggressive shift to end a 30 year trend of corporate consolidation.
If you see this behavior on both the left and the right, the situation certainly looks like a system where corporate interests are pulling the strings to their own advantage. The market supports this conclusion. Time Warner's selling price compared to cash flow indicates investors think Time Warner will raise prices. Only politicians and lobbyists are saying price manipulation couldn't possibly happen. When someone like Sanders says "the system is rigged," he has a point.
14
There weren't a whole lot of rules changed for this to happen. They just stopped antitrust investigations and starting with Reagan, they didn't defend regional diversity. The midwest was hit especially hard post-Reagan. It happened slowly and every small business owner thinks they'll have the winning lottery ticket, so it just kept getting worse. These monopolies are damaging. These monopolies are not necessary. Telecom esp is simple to fix, but they refuse to do it, giving the corporations more and more power even as they are caught outright lying and cheating. This will have a bad ending. The USA isn't immortal if you don't defend her.
2
“Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing of the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains."
“The pretence that corporations are necessary for the better government of the trade, is without any foundation."
“the interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to that of the public.”
“The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never be adopted till after being long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, and who have generally an interest to deceive and even oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.” ("this order" in the first sentence refers to businessmen).
All quotes directly from Adam Smith's Wealth of Nations. Perhaps it should be required reading for our politicans and regulators?
7
Congress isn’t the only part of government seriously affected by the growth of huge global businesses. The SCOTUS decisions have in recent days seriously misunderstood the relationship between the individual taxpayer/human being and the individual business taxpayer/non-human entity. The threat to individual human liberty is very real and the present right wing judges are oblivious to the need to have the law serve humanity and not the reverse.
7
How wrong . Small business has been the core of America
business and will continue to be so. The huge start small and become large. . Innovation and new ideas , which is because of capitalism, always win. Wise up
1
When everyone works for The Company, we have reached socialism via an alternative route.
The outcome is the same: impoverished workers and customers, ruled with an iron fist. Only the comrades on top live large.
9
Forgive the cynicism, but this column is about 25 years too late. The mantra of the free marketeers has been free and open markets create "competition. " Let the market determine "winners and losers." To the purists, this all sounded logical and fair. Perhaps it may have been good except the giants started writing their own tax codes, labor laws, and their buying power to manipulate pricing, cost of goods, and then ,seemingly,colluded to depress wages. From the Northern union shops to the non-union southern shops to Asia. From extorting towns,states and the federal government for more and more tax breaks, "incentives", and jobs , they have played towns and states against one another. Even now,AMAZON is playing the " how much will you give us to move to.....Philly, Houston, wherever . " Game,set, match! They have won.
14
Are big US companies a hedge against US companies becoming Chinese companies?
Are big US companies necessary to compete globally with big foreign companies?
1
Yes, our oligarch's are afraid of the commies and need to grow big. Both in treasure and blood (open borders).
Meanwhile, in Indiana, the GOP millionaire business owner candidate for US Senate, Mike Braun, is running on Trumpism and is running on his business record. One of his pitches is “he pays his workers twice the minimum wage.” That is a good thing?
Let’s remember this: the minimum wage is so low, has went up so little, that using it as a baseline is ridiculous. Wages, especially including benefits, have been so flat for so long, “twice the minimum wage” should probably BE the minimum wage now. When an employer like Braun uses “twice the minimum wage” as a campaign credit, they are being so ingenuous; Braun’s wages paid out should probably be four times the minimum wage now.
We have a generation of workers coming up that thinks $15-$20 an hour, without much in benefits, is good wages. It is not, of course, anywhere near where wages should be. We’ve become so brainwashed, so guilt-ridden when we hear some businessman pleading his case that his profits only went up 10% or whatever that we quit demanding that workers get a hunk of the profits too. The employers, Braun included, talk about how their workers are their greatest asset. So raise your workers wages now, Mike Braun, to prove it.
4
We’re living in a monopoly game....everything’s a game and there can only be one winner. It pervades our culture. It’s no wonder that Trump is president since he’s what this so-called winner looks like. The choice is simple, we can live like wild animals and let the big dog win it all or we can work together to improve life for all. Forget about economic dogmas.....just solve these problems but to do so we must have a smart and honest government.
9
Large companies lobby Congress with lots more money, for tax breaks so the taxpayers, you and me, are left holding a larger share of the tax burden. Big companies get away with more law breaking because they are too big to fail. Big companies decrease choice for consumers and promote monopolies. When there is a sole provider of a necessary service like say electrical power in Puerto Rico after Hurricane Maria, the provider can charge whatever they like, as President Trump, allowed to happen. The result is massive failure and hundreds of nursing home residents died from lack of water, climate control, and standard hygiene.
3
This is capitalism's end game. Unless regulated to prevent just such an ending.
We have all played Monopoly. We all know how that ends. But have you ever tried to play it as a continuous game? One that perpetuates itself for each player? One that keeps everyone in the game? It is very hard. Doable, but hard.
Of course, as is always, the power of the consumer and where, what, who and when we spend our money. Shop small, shop local, shop thoughtfully. We control the purse strings of the economy. But like the Monopoly game. It is up to us, We The People.
Thus, our Republic is doomed. Greed is the end game for many humans. They will gladly sell out their neighbor for a few dollars more to themselves. The Oligarch and Plutocracy have boughten our Gov. and politicians. They have cleaned our clocks and run the board. Game is just about over.
Maybe it is time to flip the board and start over.?!
5
Of course they are. The got the GOP elected. Congress since Reagan has been mostly GOP. The people like it that way, and Fox News keeps telling them why they like it. Corps got their people in, and are passing laws the GOP has wanted for decades. Who's going to stop them? The Dems seem pretty hapless. Things are not going to change until working people take power. And right now, they are too busy trying to earn a living.
2
You might, if you'd like, read Gerald Davis's (short) 2016 book, "The Vanishing American Corporation: Navigating the Hazards of the New Economy," wherein he attempts to demonstrate that the decline of massive corporations employing millions of Americans -- and functioning as welfare mini-states -- has contributed to the rise of precariousness and inequality (the latter being everyone's favorite bugaboo these days). It isn't terribly revealing, but you seem to be quite taken with such things.
I'm not so sure size is the problem. Regulatory capture certainly is. And the ability of business and money to influence the political system to their benefit is a nuisance recognized and abhorred by both the Left and libertarians like -- wait for it -- the Kochs. In any case, the idea that Big Business is the predominant pestilence in America has wormed its way into your cranium. And you're really running, nay sprinting, with it of late.
1
We did this to ourselves. The public didn't realize that Nixon's reopening relations with China was really about finding cheaper labor. The public stood by Reagan when he fired the air traffic controllers for daring to strike. We did nothing when companies started to offshore jobs and use h1b visas to import cheaper labor. We bought into the myth that we didn't need unions anymore because the federal government would protect our rights and make sure we were fairly paid.
Both Roosevelts were a fluke of history. They both realized that the needs of the people and the needs of the business community, and the interests of the wealthy would always be at odds with each other. They realized that government regulations were needed to ensure that all three sides needs were balanced so the country could continue to thrive and grow.
Right now both parties are beholden to the wealthy and corporate America. The donor class owns our politicians and they do their bidding. Trump recognized the anger from those who have been left behind as Obama's recovery mostly went to the banks, corporate America, and the wealthy while large portions of working class Americans were left behind.
Whoever delivers on the concerns of those people will own the voters going forward much like the Roosevelts did. Trump isn't that person but that's who a lot of people were hoping he would be. America needs an equalizer again not another corporate stooge.
19
One of the things that people are rebelling against in this country is large, growing institutions
That is correct and one of those institutions is Government
1
Adam Smith, the father of capitalism, wrote, "Wealth of Nations" to show how monopolies stood in the way of economic progress; therefore, the current anti-monopoly laws should be strictly enforced and current too big to fail banks and corportations should be broken up.
2
Another intentional outcome of the Reagan Restoration.
3
For heaven’s sake...we don’t need new laws, except one to ban corporate money and billionaire money from elections.
We need to elect people who will enforce the perfectly good anti-trust laws we have already.
Corruption is leading our economy down the tubes. Big is most definitely not better, unless you think grotesque income inequality will not lead to what it has always led to: violent uprising after a period of suffering for the vast majority.
“What’s good for the country is good for GM”
4
ATT is a company to be feared, not because it bought Time-but for great ineptitude. Now the company that forced DSL on customers for years past its “best used by” date, that failed to innovate for the benefit of customers-will impose its bilk the customer at all cost mentality on the new acquisition-look for the long, slow demise of this pairing.
3
ATT is like an octopus, and not one tentacle seems to know what the other ones are doing; it's the consumers who get squeezed.
2
One of the more revealing is pharmaceutical companies that have taken away any DEA power to oversee by purchasing legislators. The result is an epidemic of deaths due to known opioid dangers. Money is god in the US.
4
Scotus preferences big business, profits and all that money can buy (including politicians and "free speech"), over human beings.
Which is going to flame-out first: democracy or capitalism?
3
"Large companies today are often taking advantage of workers, consumers, taxpayers and small businesses." They also enjoy taking advantage of communities, town, cities, states and entire nations for their benefit. Look at how they move jobs around like a Monopoly game to extract obscene tax concessions, and even environmental concessions as they can now with our national government - EPA.
It ain't your father's Capitalism. Today free markets and a level playing field only apply to the biggest and richest. They hate competition that cuts into profits. Why pay for education and research when the government paid for by the little people can do it. Fewer executive suites higher up means scooping up lots more cash from those below making value.
And the people who exported our jobs overseas for selfish profits are the same people buying up our politicians and regulators.
We need to realize that the same type of person who sits in the Oval Office, a businessman, is the same type of person likely running our largest corporations. They are not necessarily smart, just greedy and ego driven.
9
IT's the Supreme Court that has to change. They are the ones who have taken the individual out of the equation and replaced it with the corporation. They are the ones who have thoroughly corrupted politics with their money-is-speech absurdity. And they are the ones who are now saying that if you skip a year in voting out of disgust, you may not be voting anymore, period.
The answer is, of course, to impeach one of the republican operatives hiding behind the term, "Supreme Court Justice," as Clarence Thomas has been doing for 27 years. The problem is that Chuck Schumer and Nancy Polisi haven't the guts and thus dooms this country to a sort of corporate dictatorship, presently under the actual dictator presently ocuppying the White House.
This country will have little or nothing to do with the one that was supposed to be the hope of the world any time now. We must, thus, impeach Donald Trump and have the democrats take both houses this fall.
2
Can we drop the canard about how small business is the driver of the economy?
6
The irony of this is that as companies become bigger, the more bureaucratic, the more political and the more like government they become. None of the people who supposedly hate big bureaucratic socialistic governments ever seems to realize that the only difference between them and huge corporate bureaucracies, is that we can vote out the CEOs of our government but we are stuck with the corporate CEOs regardless of how powerful and irresponcible they become.
In case you havn't noticed, they now control our elections on one or two days of the year and control legislation that enriches and strengthens themselves while weakening us on all the other days of the year. They are working overtime to get the real citizens (the living, breathing ones) under the thumb of the corporate citizens. (That would be the fake ones that grow to infinate size and power). To rip off Grover Norquist, let me say that I do not want to get rid of Corporations. I just want to get them small enough to be drowned in the bath tub.
3
It's simple, it's technology, information technology for the most part. The NYT is a perfect example. 75 years ago you could subscribe to the Times but if you were far from New York it probably came a couple of days late, it came by mail. Later, technology made it possible to transmit content to local printing plants and you could get same day delivery. Today it's online and instantaneous. As a result the NYT is now THE national newspaper, who needs local papers anymore? That has cost thousands of jobs. It's not the Times' fault, technology made it possible and therefore inevitable. Look for more technology driven business consolidation ahead.
4
Probably true but "better regulation" is not going to happen as long as Trump and his cohorts are in the White House. WHEN will more people realize that Trump in particular and many/most Republicans are doing things that are not really in their better, long term interest?!?
Ever since Reagan came to the WH I am amazed when the R's get voted into power in the WH and/or in Congress. They really don't give a hoot about 'the average' working American. Their supply side and trickle down economics have been proven to be a sham. And yet enough middle income folks vote for them that they continue to perpetuate this fraud on the public.
1
The money talks and our Government no longer put the public good ahead of corporate greed.
Teddy Roosevelt busted the trusts for a reason - for the good of our Nation.
Unfortunately, our National religion is the pursuit of wealth, aka greed. Workers getting a piece of the pie is a quaint anachronism.
10
Big business keeps it all going much to the dismay of socialist educators and economists who rarely know/understand how business operates. Finally (this president) big business is not taxes at 35%. Had they not been taxed that highly by know-nothing socialist democrats in the first place, they never would have moved out of the U.S. Finally the stares are receiving their due revenue since corporate profits are sky high. Let the states invest in their state responsibility for rebuilding bridges, etc. And let the socialist democrats crow and eat hay.
Corporations may be people too; but, they are anonymous, rapacious and without moral principles. Corporations are the most dangerous form of business ownership ever invented (and also the most effective and efficient); and, so they must be strictly regulated and controlled like the sociopaths they are.
19
Mich McConnell has already stolen the Supreme Court .
Trump and McConnell are leading the courts with Right Wing judges as we speak. By the time we get a new government elected it will be over.
Most likely it will be a Corporate Democrat so it will be just as bad.
Corporate Democrats are Republicans that are ok with abortion.
3
We need to elect progressives like Teddy Rooseveldt at all levels of government. We have an election coming up for County Executive in Montgomery County, MD where the Washington Post (Bezos, Amazon) endorsed a somewhat smaller billionaire who promises that he can bring Amazon HQ2 here. The county and state have already over-bid incentives. We need to elect our own TR here.
5
increase the capital gains tax to par with wage taxes.
1
Not surprising. Republicans have long paid lip service to small business while catering to big business. Small business does not finance K Street lobbyists, contribute to Congressional reelection campaigns, wine and dine them in fancy D.C. restaurants or take them on free golfing vacations. The Koch brothers can afford a stay at Mar-a-Lago or Trump's DC hotel but not the owner of your corner bodega.
3
Capitalism is incompatible with Democracy.
1
No sentient person older than 50 needs a Leonhardt column to know what happened. A drive down the nearest street of retail reveals chain restaurants in abundance, chain department stores and specialty shops on both sides of the street, banks headquartered in distant locations and a Walmart, if not on the random street then close by. This is what America has become.
2
The elephant in the room: healthcare. Big companies can provide a family with affordable health care; small companies often can't. I wonder if anyone has imagined how many entrepreneurs might be unleashed under a single payer system, where people could count on decent healthcare even if they hang out their own shingle. It would also free up big business to locate their resources differently as well.
1
Walmart and Amazon has killed /is killing small retail and other internet ventures are killing some small services (take travel agents, for instance). An increase in regulations and opportunities for lawsuits (those often go together, ADA for instance) make it hard for small businesses to cope because they can't afford the lawyers to protect them. In many tech businesses, the web of interlocking patents create large barriers to entry without an army of lawyers. Going public has become more expensive and complex (more lawyers) so small businesses would rather sell than keep growing. Is it any surprise that small businesses are discouraged when the first thing a new business needs is a good law team?
1
Leonhardt's article and most of the comments reveal two related biases.
First, that some people want big government to form and manage the world they think is best. In this case, people are calling for regulation and taxation to curtail, ironically, big business.
Second, most of these same people seem unaware or at least do not accept the blame they have in the growth of big companies. What did they think would happen when they ate and shopped at corporate chains instead of local restaurants and stores?
1
We have 2 local hardware stores and 2 others that carry some hardware items. We have a local grocery store (IGA) and the Lowe's Depot (why are they so often next door to each other?) is 20 miles away which makes it's "lower" prices not so low.
But, like being able to shop at local farmers' markets, having these local stores nearby is a mark of privilege.
2
Small businesses, especially those with fewer than 20 employees, have difficulty competing with big business and government for employee benefits, especially health care. It is a problem of scale in part. But it is also a problem of risk. We have been told that small businesses are great innovators, but innovation is stifled by safety-net costs that should be provided universally rather than by the employer. The structure is rigged against small business. It is also rigged against those who are self-employed.
8
An article about how big business has driven out the smaller and mom and pop businesses across the nation and not a one mention of Walmart which, with its monopolistic policies and low wages has really been the one that started the downward spiral of the small business owner.
8
My daughter-in-law and I were just talking about this very subject yesterday and the additional topic of how much the work culture and how they treat their workers today.
3
We can only hope a sufficient number of voters become aware of the battle raging between the wealthy and themselves, and vote in their own interests of the common weal. Fascinating how many people buy into the lies of the wealthy. A New Yorker cartoon probably holds the answer to this fascination as it shows a person believing himself to be a potential lottery winner sitting at a bar, outraged at the higher tax rate on millionaires.
7
While it's clear that the economy supported more small companies previously, the real uncertainty is whether what is happening today is "bad" or the best path forward in the global economy. Certainly, many companies have grown in scale and influence, but has this been a necessity due to global competition from other large conglomerates in Europe and, in particular, Asia? Could we have been worse off if we hadn't let them grow to be better positioned to take on this new competition? This is an unknowable counterfactual, but I suspect we might have been.
Perhaps it was the now essentially hundred year old efforts on the part of the U.S. to grow economically (e.g., create relatively huge and powerful corporations) that alerted other nascent industrialized nations to get into the act and compete? I suspect that what the U.S. has done regarding worldwide competition is not based on a "let them grow" attitude (and how would the U.S. be in charge of that?), but instead created that competitiveness as a feature of one version of capitalism.
1
How is the number of employees in an enterprise related to the mean and variance of individual compensation? Does growing in number of employees to compete with large global enterprises additionally mean lowering the mean compensation package including benefits to a global norm while increasing the gap between upper management and the ordinary worker? Is it the same for large multinationals and national enterprises alike?
1
Anti-trust law has been guided for many years by the Chicago School of anti-trust law. This was formulated by economists and lawyers, including George Stigler, Aaron Director, and Edward Levi. It argued that bigness and monopoly were not as important as consumer welfare: low prices and good service as is happening right now at Whole Foods, which is dropping prices and making home deliveries. An accessible and popular book summarizing this approach is The Anti-Trust Paradox by Robert Bork.
Many years ago, Louis D. Brandeis, in the era of trust-busting, argued against big business. He said it was bad for competition, for small business, and for democracy.
We may be approaching another turn of a cycle when Brandeis's views come into favor again.
6
10,000 and larger is an awfully big bucket. It would be interesting to see that sliced into some additional segments.
2
Arguably, the real pivot point came in 1971 when Supreme Court Justice (and former tobacco industry champion) Lewis Powell issued the infamous Powell Memorandum which effectively called for a dismantling of the “anti-capitalist,” “communistic” New Deal measures.
The Powell Memorandum set up the road map for the Heritage Foundation, the American Enterprise Institute, ALEC, the Koch-fueled “think tanks” of various types, and the activism of the Chamber of Commerce in promoting corporate interests.
The Republican Party, seeing the revenue raising potential in pandering to corporations, hopped on board. And all Republican presidents since Richard Nixon have nominated justices to the Supreme Court that have one thing in common: a pro-corporate ideology.
10
"A government that wanted to reduce the power of big business — through a combination of new laws, better regulation and different judicial appointments — could do so. Here’s hoping we get such a government sometime soon."
Don't hold your breath. Government is owned by big business and will continue to be as long as money rules politics.
6
Last week I chose not to renew my Amazon prime membership after reading about Bezos' revolt against the new tax voted on by the city of Seattle to tax companies with revenue of $20 mill+ annually $275 per worker. This money was going to be used to deal with the current housing/homeless crisis the city has, in no small part because of the growth of Amazon and other major companies that have caused real estate/rental prices to rise dramatically. I'm disgusted and decided I no longer wanted to be apart of the Amazon machine. As a business owner I am gouged at every turn. Taxes, fees, insurance, ect. However, as a small business I cannot raise my rates. So the fact that the richest man in the world can manipulate tax policy just because he doesn't like to pay taxes is a slap in the face to everyone of us who have no choice but to pay whatever taxes the government says we owe.
We have a homeless crisis in NY, LA, Seattle, and several other major cities that is only growing. Working people cannot afford to rent a room in many places. Families with children are living in overcrowded shelters. No more Big Business or Billionaires relief!
11
But do you support re-zoning to allow higher density housing? Democrats are fighting higher density housing up and down the West Coast because it might hurt their property values, but at the same time bemoaning the homeless problem. The hypocrisy is stunning. You aren't going to fix the high cost of housing with housing vouchers or rent controls.
2
I agree. I went to an event this past Saturday in Brooklyn held by the DNC. I asked about what needs to be done to get past the gridlock to expedite the building of high density housing here in NY. My husband and I grew/up in public subsidized housing and realize that housing stability is a top priority to rebuilding our communities. Too many of the homeless in NY are families of color with children and the effects of spending their childhoods moving from pillar to post, couch surfing, moving every time the lease is renewed and the landlord raises the rent, staying in shelters, last a lifetime. They did not seem very interested in our input or ideas, so much as our votes and donations. The few minutes allotted for Q&A were rushed through so they could get their photo ops. I agree. "The hypocrisy is stunning."
So silly. The homevoter hypothesis is not "a fact", but a theory, and there is no academic evidence for it in NYC, for example (not for want of trying). And NYC doesn't have rent control, rent stabilization, which is not the same thing at all.
A major problem is the idea of corporations as citizens with individual rights, but with super economic and political powers, and no liabilities for executives and shareholders. This idea has been deliberately advanced by Republicans on the Supreme Court.
Big companies are more efficient, but they must be more directly subject to the needs of society, which was actually the idea behind corporations in the first place.
13
While the overall premise here seems correct, the supermarket to Whole Foods example is imprecise at best. I doubt many grocery markets exist in which Whole Foods is not an addition to rather than a replacement for traditional supermarkets.
2
So, the GOP policy of tux cuts fro small business, small business creates jobs, etc.; is becoming the great "big lie" since the Reagan Administration. Not only are the 1% fat cats consolidating the wealth, into their pockets, and getting tax cuts, they are killing small business, in the process. So, the supposed backbone, of America, the small business, is going the way of the land line.
Eventually, there will be a handful of companies in each industry, which will control everything.; including who is in government. The opposite of the Soviet Union; capitalist oligarchy. Or, as describe, in "1984", 90% of the country will be mindless drones, 1% will control everything, and 9% will be doing the 1%'s bidding, are loyal, and thoughts/actions are controlled.
So much for the small business being the backbone of America.
8
Much of the time mergers result in organizational consolidations and lay offs of those employees no longer needed. If the administration is serious about saving jobs this is an area to examine with a view to limiting consolidations and or requiring companies to include plans to help those discarded to be reabsorbed into the work force.
7
It’s not just about having mare lawyers. The corner grocery and hardware stores also don’t have tightly integrated software precisely squeezing out every penny of profit from each nail or head of lettuce. Though technology has also benefited small businesses, most simply can’t afford the battery of logistics analysts and IT professionals needed to best manage and optimize it all. Small manufacturers outside of highly specialized niches have supply chain and sales challenges that leave them overwhelmed by giant competitors. Large companies definitely need to be more aggressively regulated and kept from becoming monopolies. The amount of political influence they have amassed must be curtailed. The increasing economic dominance of large companies was in many ways inevitable. Government is the only force remotely powerful enough to keep it in check.
8
This is interesting. I just finished reading an article by Robert D. Atkinson and Michael Lind called Learning to Love Big Business in the April 2018 issue of the Atlantic Magazine. The article says "Big firms pay better, offer more paid leave, and employ a greater share of women and minorities than small firms do". The book they wrote is called Big is Beautiful: Debunking the myth of Small Business. Maybe we all need to read the book and think about all of this. Which is the right answer?
3
They, the big businesses, do so in response to government regulations and the bad press resulting from the class actions. Both of these are going away.
4
I worked 30 years all in big companies. The training, the experience, and the attitude I see things cannot be matched if I work for a small company. Over the years, I see competent people from medium & small companies joined my company. They all want to be in a bigger arena to play. It cannot be stopped that big companies grow bigger.
4
In his book, Piketty defines a quantity, ß, which is the length of time it would take the entire income of a country to purchase the capital of that country. It is a measure of the relative importance of capital and labor, and roughly correlates with inequality. He shows with vast amounts of historical data that before WWI, ß was about 8 years in capitalistic countries.
WWI & II destroyed huge amounts of capital and ß declined, to about 4 years. After WWII an increase in government ownership and regulation, especially in the US, kept ß from rising to its historic levels. At the time, this lower value of ß was thought to represent a maturation of capitalism that would persist.
Piketty shows, again with enormous quantities of data, that this has NOT been the case. ß is trending inexorably back to 8 years.
He also shows that if r, the rate of return on capital is > g, the growth rate of the country, then ß will rise. His solution is straightforward and probably impossible. Simply lower r by a world wide tax on wealth.
Other economists such as Joe Stiglitz have proposed that instead we simply copy what worked after WWII to hold ß in check. Here are some of those policies:
Much higher tax rates on the Rich and real tax rates on corporations.
More federal spending on worthwhile projects.
Strong regulations on financial speculation.
Strengthen unions like requiring workers to pay for the union benefits they receive.
15
This may all be true. But, don't you need big corporations to compete with the likes of China?
1
Many of those corporations are the ones that sent jobs and our manufacturing infrastructure to China and other countries to save a few dollars on labor AND to avoid following the labor and environmental regulations that would help the domestic buyers of their products stay alive and healthy enough to purchase them.
2
Like most negative trends in a reputed democracy, they happen because we let them.
Most voters are looking to be led rather than lead. The Progressives of a century ago showed how an organized political movement spreading real informationi could capture both the Democrat and Bullmoose parties and leave Taft and the GOP in the dustbin.
Too many voters are lazy as citizens and cannot distinguish between propaganda and manipulation that excites anger and fear on one hand and real facts on the other. Our 50 year partisan battle to discredit institutions, the media and the government has created alternative universes where belief matters more than facts and creates susceptibility to us vs them appeals. Someone can only prevail over others rather than uniting rationally.
Democracy depends on voters taking their responsibilities seriously. It is a mature endeavor that requires a level of knowledge that resists appeals to divide us. Childish behavior that results from reducing the esteem of facts, empathy and understanding may be momentarily emotionally fulfilling, but creates a world in which, like any addiction, we need to increase our exposure to more of what hurts us at the expense of what makes our democracy vibrant and healthy. In a world where we can no longer seek truth because we would rather be entertained is a world in which those with more will further destroy our economy and democracy at the expense of what should be shared by all.
7
Corporate America inc.
This country or its government is no longer owned by the people.
You can tell when we pay the highest
healthcare in the world for it's people but large corporations pay no taxes.
4
With company size comes far greater purchasing power. Politicians at all levels have a price, and the big guys have no problem filling their shopping carts.
5
I find it sadly fascinating how ordinary people can be conned into believing a country can be run like a business when the two represent ardently opposed moral and social polarities. Businesses operate on the notion of survival of the fattest, voraciously consuming the competition through fair means or foul. Countries don’t ordinarily expand, except in times of imperialism, by chewing on their rivals. When that happens, atrocities occur. A version of atrocity manifests when businesses practise their own imperialism. As with traditional empires, the ruling class benefit massively while the proletariat pick up the crumbs and suffer as they must.
Government endorsed free markets do little to enhance the lot of the meek worker. Level playing fields are notoriously undulating for workers vying for survival in a corporate state of feudalism with lords of the manor demanding fealty from the serfs. Not that I endorse Trump’s insane trade tariffs, but I do see the ragged logic in his assault on the status quo of free trade which, looking at respective tariffs, is not free at all. Someone, somewhere is enslaved. Big corporations will come to hate Trump because he is attempting to protect geriatric industries, e.g. coal, while picking at the fabric of codependent trade alliances. Apple needs Chinese produced components for computers made from Canadian aluminium. He nominally wants to protect American jobs, but American companies will abandon him to the cost of the American worker.
4
While what you say is right Marcus, there are two other differences between the federal government and business that re perhaps more important.
One is:
The federal government can print money.
The U.S. can never go bankrupt unless we want to. It will run out of money the day after the NFL runs out of points. Now we cannot print arbitrarily large sums ad infinitum. When the economy has achieved its full potential or we have shortages, printing too much money may cause severe inflation. That is certainly not the case today.
The other fact is:
ONLY the federal government can print money.
No one else has a printing press. The population increases. The dollar loses value. The economy grows. As all this happens, the private sector needs more and more money. While banks can create some money, we have seen in 2008, that amount is limited. The preferred way to do this is for the government to finance via gross deficits worthwhile projects such as infrastructure repair, education, research, etc. If we do this wisely, we will reap long term benefits and get money in the hands of the people who need it and will spend it, and out of the hands of the people who do not need it and will speculate with it.
What has happened if this fact is ignored? All 6 times we have eliminated deficits & substantially paid down the debt, we have suffered a depression.
The definition of insanity is doing the same thing over and over while expecting different results.
5
This might not be such a problem for workers if Republicans hadn't also been on a crusade to destroy organized labor and undermine worker rights and workplace protections for the last forty-five years, too.
10
Until we have a younger generation of politicians with a vision to serve ALL the people and voters educated about the candidates and, therefore, policies they are choosing, the current state of affairs will not change.
11
The article deals with percentage.
What about real figures?
The article also have no information about business of less than 20 employees.
We don't see figures for the self employees and the freelancers.
In short the scope of employment in our time is a bit more complicated.
4
We are stuck in a bad place.
Why does big business win consistently?
1. They have 80 to 90% of the lawyers in their employ, working night and day to retain and increase wealth for those who hire them.
2. They buy state legislators and members of Congress through campaign contributions and the promise of high paying jobs once they leave govt.
2(a). The laws are written to consistently benefit the rich and powerful.
3. Reagan and the changes in the workforce devastated unions. Who speaks for the lower one half to one third of the economic nation? No one.
4. "Consumerism" as a cause in life keeps people focused on getting, getting, getting, turning attention away from what harms their interests.
5. High debt loads, with sky interest rates, keep people in virtual servitude to paying off their debts, a moment that does not usually come short of death.
6. Government no longer challenges big business, but in the era of Trump rips away regulations and laws that gave modest protections to citizens.
7. Tax laws favor "stock only" take overs of other companies so that getting bigger is actually rewarded.
8. People are so busy with getting through and paying for college they don't have time for activism. Next: mortgages.
9. When citizens rise up in protest, they are denigrated, herded into small areas and then arrested in large numbers, causing the rest of the public to believe their "demonstrations" were not legitimate.
10. Right wing media that attack any citizen dissent.
23
Thank you for the research and publication of numbers and data to back up the things we all feel.
Now this, "Large companies today are often taking advantage of workers, consumers, taxpayers and small businesses." is something I can show anecdotally -- as corporations took over both the small businesses myself and my husband work for, but I would be interested in pulling together the data that shows how both employees and consumers lose in a corporatopoly that operates for the investor class only.
11
I work for an immensely powerful class I railway company here in Canada and I’m also a staunch trade unionist. The greatest asset that companies of this size has is time. When dealing with its 16,000 workers through labour bargaining, the emphasis has long been on a policy of divide and conquer which unfolds over generations of working lives. A decade ago the company removed pay and benefit clauses for future employees in exchange for a dismal status quo for current workers. I argued vociferously against a two tiered pay scheme which removed the tenet of equal pay for equal work, but my point was lost by a union intent on preserving conditions for their existing workers at that time, stating that they could not protect the “unborn,” as new and future employees were referred to.
A decade or so later, the company, after a recent, brief, episode of labour unrest is offering to reinstate that lost pay and benefits over a rolling time period to the former unborn (who are now toddlers and preteens) while offering zero to little to long term employees. The problem is senior employees are outnumbered in the workplace and the offer will likely pass. The effect is that the employer concedes nothing while only gradually restoring what was already prejudicially removed, and offers no further incentives to workers in the middle or end of their careers. The collective is thus divided and conquered. The solution is to embolden unions and codify good faith into collective bargaining law.
16
In my first year as a college professor, 22 years ago, in a unionized academic system, there was a CBA negotiation and the first preparations for a possible strike. Roger, one of the older professors, pointed out to me that it was in his best interests, long term, to pay careful attention to how I was treated. Two years ago, when we actually did strike over a new CBA, the main issues of our strike were on pay and benefits for new and temporary faculty. I repeated often what Roger had told me twenty years before.
8
Corporations own our government and the politicians that are supposed to be representing the voters are actually representing the corporations which own the lobbyists which in turn buy the politicians. The whole process is now in overdrive with trump, inc. I'm not sure when voters will realize that they are now owned by big business.
27
they have been since I have lived in the States ! this exited way before Trump , he is just going one step further amplifying the problem. Many Americans work daily to get by and have no time to read or understand the situation.They believe that if they vote the right congress man that he will make sure things will get better. But it ain't so and they have not woken up yet if they ever will and that is the intent of a government that wants to control you .
2
Do you feel that, perhaps, some of Trump's actions might indicate that he feels it is okay now to let us know that we already are living in a fascist, or at least corporatist state?
The current deficit in terms of the federal government is almost equal exactly to the decline of corporate taxes paid as a percentage of GDP. Corporations are paying much less recently and with the latest tax cut, significantly less than in the 1960's which accounts for the deficit. Then when you factor in the negative effects of very wealthy people having disproportionate political power as a result of massive corporate profits paid via capital gains at a much lower tax rate, you get cronyism that has fully taken over the Republican party and much of the state governments. Further cuts in income at the state level has starved many states practically into bankruptcy. You see this in Oklahoma, Kansas, Kentucky, Tennessee and West Virginia. This was the goal of the Koch's and Mercers to drown the government into a bathtub of red ink. States now have to further cut education and infrastructure that have erode our competitiveness making movement of industry away from this country even more desirable. Trump relishes in the same unemployment metric that he derided on the campaign trail as being false, as another generation of youth fall further behind in education and wealth generation trapped in low paying jobs barely making ends meet. Call it "Full of IT Employment". America has been betrayed by people pretending to be conservative and the magnitude of that "Con" is now becoming more realized. "Don the Con" was who they needed to close the deal while they ran for the exits.
26
Couldn't agree more. In 1945, more than 1/3 of all federal revenues came from business. By 2015, that figure had dropped to 10% - more than a threefold decrease. The shortfall has been covered by an equivalent increase in individual and payroll taxes. Exxon wins, you lose…
"Welcome to the Machine" - Pink Floyd, Wish Your Were Here.
5
Mark in New Jersey, what I don't understand is why citizens in Virginia, Oklahoma, Kansas, Kentucky, and Tennessee don't see this happening. They stand with Trump and blindly follow into their own misery supporting policies from him that hurt them. "Don the con" indeed. Shame on Faux News for their complicity in this sham.
Thanks for pointing this out. Government has a role to play in shifting industry competition from oligopoly and monopoly towards perfect competition.
For example, our airline industry is more concentrated than Europe* (top 4 have 80% of the market vs. 48% a decade ago), with much higher profits per passenger ($22 vs. $8) but much worse service (only 1 of the top 30 airlines is in the U.S., vs. 9 in Europe). When oil prices fell 2015-2016, consumers got none of the benefit in reduced fares.
*The Economist "A lack of competition explains the flaws in American Aviation"
20
"Big companies, to be fair, have their virtues. They can create jobs, take on ambitious projects and compete around the world. But the balance in the modern American economy is off. Large companies today are often taking advantage of workers, consumers, taxpayers and small businesses."
Big companies may create jobs, but not in the places we need them. Walmart has created a few jobs in my home state of Vermont, but these jobs do not support the community. Most of the money goes back to Arkansas. All the small businesses are gone. Young people don't stay in the state. High School graduates have nothing to do after school is finished. Opioid use is on the rise, and communities are not strong enough to protect our depressed and hopeless citizens.
Global corporations have replaced community, and we are all the worse for it.
40
It is happening in many states and here in NC as well. Drug use among hopeless teenagers are rising. I do not understand the government and what they plan to do when all these young people are doped out and do not even want to work simple jobs. Millennials are already showing signs of not wanting too work to much but want the big income!
1
Well, this is maybe the dark side of the deal to some extent. On the other hand, outside of the US, most places pay only lip service to anticompetitive ideals. Like it or not, it seems that companies will either get crushed internally via these mergers, or externally by competition from large foreign behemoths.
Maybe this does not apply entirely to the matter of AT&T anymore. Nevertheless, ATT was the ground for Bell Labs which did state of the art research, including inventing the first transistor. Not everything out there simply requires a connection to the internet, a small server, and a few programmers. If the monumental investment is not done, we don't stay ahead. If we don't stay ahead, the opportunities for real innovation (not internet + server + programers) is less.
2
"The situation will get worse before it gets better..."
What reason is there to believe it will ever change direction? Like 'inequality', there's a one-way ratchet that must be politely ignored, no projections made, even by those who lament it.
10
''for years politicians have praised small businesses while catering to big ones'' as explained by Ben Casselman in The Times last September: https://nyti.ms/2liPfKq
This symbiotic relationship helps both maintain their power and wealth.
There are fewer start ups, start ups are being swallowed by big companies, and real competition is getting squelched. The competitive battlefield is shaped by special tax loopholes, subsidies and regulatory relief, helpers that small companies can't afford to lobby for.
Neither corporate leaders nor the people's ''representatives'' in the House and Senate care a whit about working people. The current Administration is hell bent on promoting corporate interests at the expense of all else.
Leonhardt's charts show what has already happended. It is only going to get worse.
11
What great graphics! Is the first one back as far as the data will carry, only to 1985? In any case, what a tragedy. Farewell the dream of a Yeoman Republic.
4
This in an important column with far reaching consequences. However, I want to address the token effort to be "fair and balanced":
"Big companies, to be fair, have their virtues. They can create jobs, take on ambitious projects and compete around the world."
Big companies can create jobs, but they don't. They might add jobs to their payroll, but those come at the expense of another somewhere else. They are able to grow and stay in business because they are more efficient. This means they can provide the product or service with fewer resources, or people. This efficiency can be a good thing, but it isn't a net add of jobs.
Big companies rarely take on ambitious projects, at least by my definition of ambitious. Within the timeframe of Mr Leonhardt's analysts, many business have strayed from Peter Drucker's philosophy that the purpose of a business is to serve a customer and adopted the idea that the purpose of a business is to reward shareholders. This has accentuated the short term/quarterly statement focus and favored financial engineering over product engineering. I'm hard pressed to come up with an innovation in the last 50 years that hasn't been driven by a small company, entrepreneur or been funded by the government. Big companies are more interested in the next quarter, not being ambitious.
Yes, big companies compete around the world, but they do so because efficiency, and the ability to navigate various governments' regulations.
18
Shrinking the government as we have been doing for a long time is wrong. It provided steady work and benefits to people, as did manufacturing before it left our shores. And the government wasn't as dependent on profits as the big guys who have to make the next quarterly number.
Now we have the disrupters who want to remake the global business world to their specifications, always for their own profit. That's the rub--their profit is our loss, speaking for the majority of us. Unions, regulations like Glass-Steagle, and crucially EPA and FDA have been gutted in favor of a small group of investors. And government money, instead educating the poor and repairing the infrastructure goes to whatever perk these guys are lobbying for at the moment.
Wake up!
11
In the near future large companies can dictate directions as if they were governments itself. In some countries for instance, the choice of a new CEO of a large company has more impact than the choice of a new government minister, for example.
Not to mention that when companies become too big to fail, they can dictate the rules of the gamble.
9
Has already happened her in the US!
Er...I was reading about the inevitable tendency of modern capitalism to produce oligopolies in economics text books 50 years ago.
23
But starting 40 years ago we started ignoring what the text books say and leaving our anti-trust laws unenforced.
1
and it become reality
!
Many small farmers have been unable to stop the conglomerates from eating them up. But some 21st century acquisitions are consumer friendly. The Whole Foods/Amazon linkup is amazing - local organic and (non-organic) farmers are preferred vendors to local Whole Foods markets favored by local residents who now are able to order online and have groceries delivered to our homes. Don't blindly trash every change in life.
4
Consumer friendly only in the short term, but even then only with costs that are hidden.
One only has to look at what Amazon has done to the book industry to see that. Sure, we get our beach reads at a cheaper price but at a cost to the publishers who can no longer subsidize risks on more substantive titles.
27
Because of Amazon (actually, online retail) thousands if not millions of titles are available to readers all over the world. It's not just price that matters. And it's just not true that publishers are not subsidizing risks. What is true is that more writers are self-publishing - because they can thanks to online retail.
Meanwhile, low income Americans have food deserts. Glad you can patronize Whole Paycheck.
Unfortunately there will be no government or courts who want to reform the power of big business.Our candidates are paid for by big business and have cadres of lobbyists who will be sure that their interests are served.One thing which could change this is campaign finance reform.If there were real reform no politician could be bought and candidates would not have to be constantly "dialing for dollars".Campaign finance reform is long overdue.
38
Of the left, I nonetheless have quite a few good words for the great Baronies of American free enterprise. I believe these firms - the Duponts, GM, 3M, the great manufacturing dynastiestend to be liberal in politics and public spirited. This charity on my part doesn't extend to either the extractive industries, nor to finance capitalsim. Further I recognize that the Baronies are purely self-seeking when it come to issues directly affecting their profits and taxes. But otherwise recognize the Great Ones for the progressive force for the good they are.
3
I, for one, welcome our new corporate overlords.
It appears that the only thing that Republicans want is small government and BIG BUSINESS. And the judge ruled accordingly.
Big has not always been better, as has been proven over and over. Banks to big to fail comes to mind.
Had they been left to fail, another one would have been formed to fill the gap. That is how Capitalism is supposed to work.
Perhaps, if the Government had used the bailout money to actually improve the economy, by providing infrastructure programs, people would have had good paying jobs and spent more. Also income tax collections would have been higher.
But as was once said, "everybody's money is nobody's money".
All of this started under Reagan's Administration. The "Godfather"of the Republican Party. Now we have Trump in that position and it is only going to get worse.
Consolidation is only good for the companies, it does not bring anymore money into the pockets of everyday citizens and it certainly takes away from the coffers of of government.
It does destroy small business, local economies and jobs.
Why does the Republican party think this is the way to govern?
15
@ Jean
Actually Jean big usually better. The myriad of products and services you use every day wouldn't be possible without the economies of scale and capital resources that come from bigness.
You mention banks. In fact most of the banks that failed in the 2008/9 crash were small ones. As for the major banks the top ten of which held something like 65% of the assets in the US banking system couldn't be allowed to fail without freezing up the entire credit system on which the US economy is based. As it was it came close. You may find this frustrating but it is reality.
4
"Actually Jean big usually better. The myriad of products and services you use every day wouldn't be possible without the economies of scale and capital resources that come from bigness."
Actually John, stating a point of view , no matter how self assured, does not make it true. Amazon is the finest service in the history of services, but if it didn't exist we would still be able to find and purchase the products and services we need. It would just be less convenient. And for better or worse, ( I believe mostly worse), convenience is the prime force driving consumerism in our great land.
"You mention banks. In fact most of the banks that failed in the 2008/9 crash were small ones. As for the major banks the top ten of which held something like 65% of the assets in the US banking system couldn't be allowed to fail without freezing up the entire credit system on which the US economy is based. "
I won't address this except to say your logic is somewhat twisted. And because I have stated that, it must be true.
They do not think !they do not care for their citizens ,but I have to say the world is getting more populated and with that cost of care for citizens is rising and unless people want to pay more taxes ,nothing is going to change.
American consumers these days will not buy hardly anything unless it is on sale or available at everyday deeply discounted prices. So eager are we to get a deal that we willingly give up our privacy, which enable marketers to access and monetize our shopping behaviors and commercial profiles.
This environment has devastated all but the largest retailers in books, groceries, hardware and drug stores, among the most obvious examples. This has led to turn, rapid consolidation among former competitors, further reducing actual product or service choices. But consolidation eventually results in higher prices and compromised personal data bouncing around the e-commerce
We have met the enemy and it is corporate gigantism.
22
Well said !
Very interesting analysis. When you take automation into account the picture looks even bleaker.
Automation requires capital and displaces workers enabling corporations to reduce the number of employees and gain a production cost advantage over their competitors.
The competitors then must choose. They can automate or relocate to cheaper labor markets (or do both). Either choice requires investment and raising capital. The amount of capital required to automate (or to offshore) poses a significant barrier to potential competitors who would like to enter the market and compete.
While we think of automation in terms of robots building cars and circuit boards, automation has a great effect on service providers and banks too. Whenever you call a corporation and get an automated answering system, you are dealing with a "robot". Whenever you open your bank statement, compare the number of automated payments you made with the number of checks you have written. That terminal next to the cash register that processes your debit card payment is a "robot" too.
10
Those self serve registers put people out of work and customers don't get a discount for taking on a part-time job.
6
If you don’t like self serve McDonalds registers, you are free to eat somewhere else. People love to moan about the negative effects of change, but they will usually take the better/faster/cheaper service over other methods. In 1970 there were around 400,000 telephone co operators in the US- would you like to go back to operator assistance for looking up numbers and making long distance calls? And back to the high phone rates of 1970? Or would you rather walk around with a smartphone in your pocket, able to make as many phone calls as you like, anywhere in the world, for very little or no incremental charge versus the flat monthly rate that you currently pay? The existence of the smart phone is evidence that the old phone company / phone equipment monopoly didn’t hold, yes in part due to the judicial Att breakup of 1984. Innovation in that industry and most others was spurred by a combination of small entrepreneurial companies, some of which are now very big, and large companies. Companies and capitalism drive the economy. How many people from capitalist, wealthy societies try to emigrate in the opposite direction. Most poor/stagnant economies are not democracies and not capitalistic.
There is a third chart, as important as these 2, which is essential to view. It shows that the share of national income accruing to workers has been on steady decline since the economic golden years following WWII. It peaked at 66% in the early 1960s. It almost reached that peak again in 2000. But in the last 16 years the downward trend has accelerated to where now labor only takes home 58%. That means trillions of dollars accumulated as corporate profits, some of which are distributed to shareholders but not to middle-class workers who don't own equities.
See the chart and discussion at:
https://www.bls.gov/opub/mlr/2017/article/estimating-the-us-labor-share.htm
18
These comments would not have been heard 20 years ago. It is becoming obvious to more and more people over the fog of propoganda, that we are losing our Republic to large, wealthy and influential organizations. The separation of church and state was not enshrined into our constitution due to a fear of God but a fear of large undemocratic organizations. Constitutionally there is no difference between the threat of a Pope and the threat of a CEO. Corporations were not a threat in 1776 but in the intervening years they have become an existential threat to our Constitution and rule of law. To paraphrase Grover Norquist, I don't want to get rid of Corporations, I just want them small enough to be dragged into the bathtub and drowned.
23
Honestly, I think we have already lost the Republic, the exact date of the loss maybe is for historians to figure out. We've been living in a corporatist oligarchy for along time with a veneer of Potemkin democracy that is allowed to distract citizens and waste their time on matters unimportant to the oligarchy. And the lively commentary on the Times website aside, we have lost all hope of an educated citizenry able to debate any of these matters. It is really depressing. The real question for me is: given that the Republic is lost and the absence of any corrective force, how do I live now, where should I live, and how do I raise my kids in this? I'm muddling along on those questions without meaningful answers. I don't have any grand strategy for how to live as a citizen now and would like to have one - it might make me fill a bit more in control of my own destiny. Ordinary local politics as usual feels really pointless in face of the dramatic changes in the rules of the game that our society needs (and will not get).
10
Worse than the Corporatism this suggests is the Plutocracy the GOP will implement if it continues to rule the roost.
I worked for gigantic business.
I owned a 38 employee production company that traded internationally and that interfaced with tons of environmental/zoning laws.
I lived in real world for more decades than most readers here.
I pay more income tax in retirement than lots of people earn and always have.
I served 4 years in military and never have taken a government "welfare" handout save for a military benefit.
Those that try to disparage my comments by accusing me of knowing nothing, of being on the dole, of being bitter about others' successes, of wanting the USA to fail are patently wrong.
No I love my Nation because to me it stands (I always thought) for the highest ideals of peace, truth, justice, reason, opportunity, and human equality for ALL. I know well its imperfections but I always thought the road we are on though twisted and often back folding was advancing toward the ideals.
Then came the "modern" GOP - more interested in power than anything else. More authoritarian than business oriented. More fantastical and fanatical than plausible fiction could have constructed - monstrously counterproductive to people and the Blue Marble we live on.
Big Corporations forced to be good citizens are good. A modern necessity.
But the GOP plutocracy will be a mix of anarchy, fantasy, authoritarianism where only exploiters and demagogues thrive.
55
I tend to be quixotic but here is a suggestion. We have a government agency the Small Business Administration. If you grant that any business is more complex than a hundred years ago. Consumers are pickier, regulations many of which are sensible are multiple, technical and changeable. I won't tackle health care because that is easy: single payer. In my world - I warned you - Congress would enable the SBA to offer software packages that would really help manage a small business, and keep it updated. We used to have county agents that visited farms and often found ways and means to help the then small farmers to improve their lives - now we call it agribusiness and they have lobbyists. Voting with either ballots or pocketbooks is perilous, and judges are going in the wrong direction, as you have noticed. Thanks for digging into this issue.
9
The government is failing to work on behalf of the people it's suppose to represent. It's not difficult to come up with creative solutions to the current extreme inequality. For instance, a progressive minimum wage that requires companies to pay a higher rate based on the number of people it employs would justifiably inject more money into the overall economy. Instead, we let politicians fool us into believing that such demands on wage increases would make it impossible for companies to do business, even as profit margins and CEO salary increase. We are letting large companies take advantage by not demanding more from the government.
19
It only took about forty years, but America can now consider itself a plutocracy and oligarchy. The Supreme Court decision, Citizens United, that gave corporations personhood sealed it. I like to say we have a zombi democracy. It is for all intents and purposed dead, but it just doesn't know it.
Income inequality is at a level not seen since the Gilded Age, where wags have remained stagnant despite increases in productivity. As a result, trillions of dollars have been siphoned out of the general economy to go into the coffers of the wealthy. How do you think Jeff Bezos amassed $120 billion? Our two political parties are funded by the same donor class. We live in fear under surveillance fighting in wars where the enemy changes every few years or do not pose a threat. Amazon and Walmart have destroyed our local small businesses. But don't count on getting the straight scoop from the media, now controlled by six corporations who just successfully fought to kill net neutrality.
87
Corporate personhood dates back to the first Gilded Age with Santa Clara County v. Southern Pacific. Citizens United took that decision, merged it with Buckley v. Valeo and gave us our current one dollar, one vote political system. Enjoy.
15
I agree with much you stated, but if we have ANY chance to reverse these trends it is to vote Democratic in the coming elections. It is absolutely false to say that both parties have the same goals. Any Republican with a sense of responsibility to their constituents as opposed to the corporations is leaving. Only Democrats have the outrage and desire to change this system. I hope people wake up to this fact, but my confidence is not high. Every vote matters!
1
hey thanks, you answered a question that was on mind on this.
The idea that free markets solve all problems is at the heart of this. Absolute belief in that principle spread around the world after the fall of international Communism.
You see it in the arguments over the Canadian milk tariffs. Canada decided to adopt a planned economy when it came to milk production and strictly control supply for their internal market. Other nations, including the US, have adopted similar protections for favored industries.
Maybe it's a form of corruption. Certainly Big Sugar has a lot of political clout. Or maybe it's a decision that challenges the idea that only efficiency matters. Maybe that's the right decision.
International corporations have the ability that smaller operations lack to manage their affairs to get the benefit of governmental policies.
Something similar happens within the USA with states competing for low taxes and "business friendly" policies. Eventually, workers and consumers lose out. Since the ideal of free markets includes an element of mythology, we need to do more to understand what is happening. Hint: It's not foreign nations taking advantage of us or illegal immigrants undermining wages.
12
'. . with states competing for low taxes and business friendly policies. Eventually workers and consumers lose out. ' Yup! I advocate for 1 government (not 50) with a single set of rules. And coincidentally, we get rid of the inequity that gives small jurisdictions (eg Wyoming with a population less than a mil gets 2 Senate slots, same as California) undue influence.
All of our problems are corporate...
One society's waste is another corporation's profit margin. It's in everything from health care to prisons to military. We need change but the forces of corporate dollar making own the representation.
This is only going to get worse, until the robots take over. It's like a big game of musical chairs, and everyone is fighting to be the last company standing when they pull the last chair. This trend directly ties to income inequality. Everyone wants to be the last one with a fist full of dollars.
Capitalism is going to die. It has no choice. The math is irreversible. But the transition away is going to be very, very costly--on us. Companies aren't going to share that cost.
It's not hyperbole. It's math. And it's absolutely coming.
9
The solution is rather easy. If we had income taxes with many marginal rates - steps, then as people started to make gazillions, the federal government would take so much in taxes that the individual would opt to do something other than take his or her loot to the Cayman Islands. They talk about trade and treaties but higher income tax rates for the super high earners would solve that too. Instead of sending manufacturing to China so that the boss could take home more income - that same individual would realize that giving the IRS more taxes would be a lousy trade off and would instead keep the jobs here in the U.S. Building a productive and creative work force with strong communities is exhilarating too. Money isn't everything.
16
I believe your math is incorrect. You could tax all people who earn more than $10 Million a year at 100% and would gain very little in tax revenue (just not enough people making that much money). Even if you took 100% from people who earned $1 Million, the revenue generated, if distributed to all the remaining people, is on the order of a few hundred dollars. On the other hand, if all income above $20,000 was taxed at a flat rate of 25% and no deductions were allowed (so the rich can't hide their money), the total tax revenue would completely eliminate the current budget deficit.
Higher marginal tax rates for the super rich should not raise more revenue for the government. The purpose is to encourage businesses to plow profits back into the company - modernize, expand, etc. so that there are no taxes - just overhead which is not taxed. Grow the economy. Maybe give the rank and file a raise. That would be taxed to the recipient at much lower rates.
1
Your math is faulty. With high taxes, like our grandparents had, rich people would spend that money on creating jobs instead of hoarding it. That's what his math is based on. Waving a wand and saying 'if no deductions are allowed' is absurd. There are millions of tax cuts for businesses in this country, federal, state and local. You'd have better luck with gun control than tax cut control.
There is an easy way to moderate this expansion. It is to vote with our pocketbooks. If we stop buying all the needless stuff they are selling they will rightsize quickly.
What we spend our money on is what we vote to exist in the world. We are causing these consolidations - we can stop it easily.
13
It is not We the People any longer it is -
We the Corporations of the United States, in Order to form larger companies, establish arbitration panels, insure domestic Immunity, provide for our common defense from Taxes, promote the Corporate Welfare, and secure the Blessings of Money to ourselves and our Shareholders, do ordain and establish this Constitution for the Corporate States of America...
Maybe it is time to end the farce of citizens electing representatives but to have the direct and open auctioning off seats in Congress to represent the corporations and wealthy that can pay the most for them. How different would it be - except the money paid for the seats goes directly into the treasury - which they will no doubt find a way to have it paid back to them.
18
What immediately comes to mind is a book I read many years ago, George Orwell's novel Nineteen Eighty-Four.
"Big Brother" is not only watching us, he now owns us. We are evolving into a society of them vs us. We the People grow more and more faceless every day.
How do We stop this? Our only salvation is to vote these subpar humans out of office.
13
There is an alternative to voting .. that is to vote with our pocketbooks. If we stop buying all the needless stuff they are selling they will rightsize quickly.
What we spend our money on is what we vote to exist in the world.
3
Bob I agree. Too many people contiune to buy stuff with money they have yet to earn, they buy stuff they don't' need. What We all really need and want can not be bought.
thanks for the reply, Mary
One reason for the consolidation imperative has been the high cost of health insurance. Small businesses struggled to keep up with soaring health insurance premiums. Workers also tended to find better benefit packages and vacation at larger employers along with career path opportunities. So while I agree with the negative consequences of this trend towards bigger companies, there is some positive too.
4
Those are symptoms of a broken social contract that no corporation will fix. It should never be a business owners responsibility to provide health coverage in the first place.
16
I disagree about health benefits. Many large corporations migrated to the cafeteria type of benefits. HMO, PPO, family size, some PPO's are 80/20, skimpy dental benefits. Other opportunities listed vary by company. Large companies do look better than the meager benefits offered at small companies. Vacation varies on years of work and position. Historically management packages are better all around.
2
Hmmm? ...Perhaps the US should have universal health insurance?
1
Agree. "U.S. companies get billions in taxpayer subsidies to spur exports, but fail to pay taxes on billions in offshore profits."
https://www.watchdog.org/national/companies-receiving-taxpayer-backed-su...
"Do Oil Companies Really Need $4 Billion Per Year of Taxpayers’ Money?"
http://www.miamiherald.com/news/politics-government/national-politics/ar...
13
How many jobs are created by those expanded exports?
Are you arguing that for an oil-based company to provide jobs, it needs federal subsidies to remain profitable? That sounds like a flawed business model, as well as unregulated profiteering at taxpayers' expense. I suppose next you'll tell us all those oil workers, including management, are paid the national medium income.
People also lose jobs when the rest of us pay more taxes to make up for lazy corporate takers. The money has to come from somewhere, as the hundreds of closed hospitals attest to.
Kark Marx wrote about this over 150 years ago. Teddy Roosevelt saw the dangers and did something about it. Since then central government, both reasonably good administrations and some not, since they seem to be controlled by big money and not tuned into mainstreet have not done anything. Who will turn this around? Us, we need mass social movements and then elected officials who are part of the movement.
9
Dems fight for better work environments. Reps take everything away like is happening with the current administration.
Is it too extreme to think that extremism in capitalism can also be another form of totalitarianism? And that hegemony leads to fewer choices, less regulation and more propaganda telling us what great choices we have and that less regulation if for our good.
22
Capitalism always and everywhere trends toward monopoly. Monopoly is totalitarian whether it manifests itself in the political or economic sphere.
2
I live near a cement plant that used to be the 2nd highest emitter of kiln mercury. The Obama administrate set a date when mercury had to be captured. The parent compan, Heidelberg, a German company threatened to close down the plant, complained they couldn't afford capture equipment, a real whiner. Turns out Heidelberg has 3000 cement plants worldwide. Eventually the capture technology was installed. The staff are so proud of it.
1
Some policies that favor big business:
- taxation. Big companies are better at exploiting tax loopholes. But their biggest advantage is using tax havens.
- the judicialization of society. The longer it takes to get a definitive verdict the less feasible it is for a small company to sue a big one - even if they have a solid case. They may go broke on lawyer costs and yet lose due to some technicality.
- the judicialization of government. Over time the powers of big companies to fight government regulations and fines has increased to the point where the government regularly feels forced to compromise. Small companies don't have that power.
- weak anti-monopoly laws. Anti-monopoly regulators should be much more active punishing companies that try to "cut off the air supply" of competitors. Now they restrict themselves mostly to approving mergers and leave it to companies to sue competitors for monopolistic behavior.
21
We're obsessed with quantifying everything these days yet we miss a simple numerical truth in that although our country's antitrust laws aim to maximize benefits to customer, the data shows that we have instead maximized benefits to the rich.
Not sure if a feat of great trickery or self-delusion. I would be inclined towards the latter.
14
This is the corporate machine of perpetual corruption- buy off the politicians in both parties as needed- also reward them with careers as lobbyists when they retire and they provide the legislation needed to keep the profits coming.
These profits come at the direct expense of working people. This is clearly demonstrated by the fact that we pay twice as much for health care as other modern nations.
Health care offers a great example of another tactic sponsored by these corrupt profits- media relies on advertising revenue from these corporations, so universal medicare is usually portrayed as a crazy left wing idea. How so? The majority of doctors and citizens want it- this in spite of all the propaganda generated by the industry that the rest of the world has to stand in lines dying of disease while waiting for health care. Data clearly shows this to be a lie.
The health care industries level of corruption can be clearly evaluated by comparing data from other countries but even without data you can be sure our criminal justice system, military defense system and the rest are squandering similar trillions of the dollars via the legal corruption of our unique form of corpocracy.
Democrats, at least, need to put campaign finance reform at the top of our agenda.
24
"... They can create jobs, take on ambitious projects and compete around the world..." Yeah? Greed is what it's all about. The jobs you say are created are low-paying. What's so ambitious about Home Depot or Lowes or Chase or IBM going international because they have phones? Are we supposed to be impressed by big data? This country has always been about "big" business and it always will be.
8
In South Korea and Japan (with a hiatus after the war) it is said a few conglomerates dominate the business world, which, combined with a culture of avoiding confrontation, apparently restricts competition and influence politics domestically. But this analysis does not single out this category and I suppose there would be more interesting results come out from looking at really really big companies.
3
Businesses need consumers and some workers. If consumers can't consume enough, businesses will eventually be hurt. It is short sighted not to make sure that the middle and lower classes do well enough to support the economy. It's also very short sighted, as someone mentioned, not to have invested in better infrastructure. The US could have been a leader in innovative infrastructure and energy areas but it decided rewarding the people who bought them was more important. Eventually this will end badly but not for a long time.The propaganda machine is still working too well.
42
Infrastructure did you say? If more Americans were interested or had the money to travel to our foreign neighbors, they would see how far behind our country is on infrastructure innovations. Our infrastructure is crumbling and nothing is being done by this current administration or our do nothing Congress. Wake up America.
2
Americans who are in the middle and lower working classes must be taught that they are being played by the wealthy elites who control our large corporations. The most important lesson they must learn: there is no such thing as a free market economy devoid of government intervention. The only issue is what shape that intervention takes and who it helps. So, stop buying the false argument proffered by conservatives that measures considered by liberals in the government to ensure a fair distribution of wealth, income and in this case corporate profits, represent socialism. Corporations are merging to become bigger to enhance the likelihood of their survival and their profitability. And the larger, merged corporations are in fact increasing their profitability. But, as the article states, the profits are not going to the workers. They are going to the CEOs, the upper level managers, the directors on the corporate boards and the remaining shareholders. So, it is clear that the majority of Americans in the middle and lower classes who work for these companies are not being helped by this merger madness. They must vote for Democrats who have embraced an economic justice agenda and who are committed to reversing this upward redistribution of wealth.
84
Democrats mouth these things, yes. Hope and change means the Dems hope you will forget about change. Obama was very business friendly.
2
This is a superb, groundbreaking article. We already have the laws on the books to address the problems described in it -- our federal and state antitrust laws.
Antitrust law, as originally enacted in 1890, was a political judgment made by Congress during our first Gilded Age. Its central premise was that the excessive concentration of economic power, if left unchecked, would undermine not only our private markets, but also our public institutions and civil society -- indeed, our very way of life as a nation of free private actors living together in a democratic society.
The theory of antitrust is that competition must be the organizing principle of our commerce. Otherwise, something worse will eventually take its place, such as crony capitalism or suffocating public regulation.
In each market, there should be as many sellers as economies of scale permit. Most markets will admit many sellers, who then will keep one another in check. Where a market can be optimally served only by one or a few companies, or where competition is corrupted by "anti-competitive" or "exclusionary" practices, there must an antitrust intervention -- government lawsuits and/or private actions for treble damages.
Some jurists have read these laws very narrowly, especially since the late 1970s, but antitrust remains the charter law of American commerce. If it is vigorously enforced (rather than emasculated), it could provide structural, bi-partisan relief to an ailing nation.
29
Beautiful analysis! I hope our policy community and institutions pay attention to it. Your piece reminds me of Mancur Olsen's, 1982, book "The Rise and Decline of Nations", which correctly predicted what you show. Olson found that affluent companies can use their power to influence public policy in their favor.
One outcome of this kind of consolidation is its negative effect on competition and the barrier created for entry of competing ideas in the market. Other studies have shown that this negative effect on competition also results in slower economic growth and contributes to a decline in productivity.
In my experience the aggressive lobbying of big interests in the market prevented this country from leading in superconducting Maglev transport that could be making our highways much safer and the cost of shipping goods and travel much less if the US had tested the original invention of Drs. James Powell and Gordon Danby and the concept of using the rights-of-way of the Interstate Highway System to build a 300 mph national network for hauling freight, trucks, and passengers and their autos.
Instead our policy makers are engaged in allowing Japan who developed & tested Powell and Danby's first generation system to demonstrate it on a route from Baltimore to DC with the aim of installing the system on the North East Corridor. Japan's system only carries passengers & the 2nd gen system is capable of carrying trucks as well as passengers, see: www.magneticglide.com.
14
Where David’s argument fails – badly -- is the invalid premise that there is a legitimate SOLE correlation between the size of companies that grew and grow by accretion and the current economic state of our middle- and working- classes. The truth is that MANY factors contributed to that sad reality, and the size of “Big Business” may be the least significant among them. At the same time, the extent to which companies make correct decisions regarding mergers and become more economically successful as a consequence improves their performance and benefits the savings of millions and millions of Americans with 401Ks which invest in those companies, making middle-class retirements more secure.
We can bar companies from growing by accretion beyond certain levels and FAIL to affect the plights of middle- and working-class Americans because we don’t address all those other factors; yet by such a bar we could damage the retirement prospects of all those millions of middle-class Americans with 401Ks.
Other factors that have impacted on family incomes and increased income inequality? Start with our B-schools that for more than a generation now how emphasized creative destruction, quarter-by-quarter earnings growth as a sine qua non to share-price gains, and any means necessary to stimulate earnings, including automation leading to large layoffs, and unchained outsourcing of jobs to other countries with vastly lower labor rates. And these are just SOME of the more obvious factors.
4
Then proceed through corporate strategies that cause businesses that are labor-intensive to ride very hard on average cost of employee per unit of work performed. These factors are central and have nothing to do with mergers and acquisitions.
Then, of course, the upper-middle-class is doing just fine in America and almost always did, because ALL kinds of businesses increasingly value their skills, and because those individuals, overwhelmingly individual players and not union members disadvantaged by needing their compensations negotiated for based on commodity skills, can argue with employers based on their individual value to the enterprise.
Finally, regardless of speculative actions to limit mergers and acquisitions, the current strength of the economy (and growing) may make the matter moot: demand for bodies and skills at ALL levels is heating up immensely, and that will lift ALL boats.
Show me a model that identifies ALL the factors that affect average family income and income inequality, and show how by adjusting policies affecting EACH of those factors we might obtain society-wide advantageous outcomes, and, even if I disagree with this or that policy notion, I’ll consider giving the model and the HOLISTIC argument five beans. DAVID’S argument? Doesn’t merit one bean.
2
Stories are not facts or evidence. Investigate the research that has been done on the effect of concentration and income distribution. As a famous economist once said, 'Anyone can have a theory'.
2
It is a fact that a country where all business is eventually owned by only one organization would be a totalitarian state. It is only logical that the continual growth of huge corporations and the shrinking of small business leads us inevitably toward that eventuality. The fact that our country appears to be less democratic and less representational to its real citizens with each passing decade is not a coincidence.
1
If your paycheck is from a corporation, you will vote for what is good for that coroporation in order to keep your job, and you will sooner or later adopt the mentality of that corporation regarding other corporations (rivals) and the government that is trying to control the behavior of that corporation. In this article's charts you can see the trend since 1985 (Reagan) and this is a large part of the reason for the shift in US politics over the last forty years.
11
To this thoughtful article should be added the unhappy fact that the larger companies are more Orwellian, more like anxious governments, and more able to mount rather complex forms of surveillance and punishment than any mom-and-pop shop could ever muster.
The implications of this are rather depressing, of course.
24
I gather from most comments that business monopolies are a bad thing, and I certainly agree that so-called crony-capitalism (i.e. buying influence with Congress) is a huge negative influence in our economy. However, if monopolies are bad, then how about the government monopoly on K-12 education? Could we please break up this powerful monopoly and let small businesses make a contribution in this area? After all, the US scores 26th world-wide in math-science education (behind Viet Nam), and perhaps some competition would enable more students to flourish.
2
Education isn't a business.
However I would certainly love to see more personal involvement at all levels of society.
There are, of course, plenty of K-12 schools that are not government funded. My sister sent her children through the Waldorf system and it was brilliant.
11
A monopoly in a business environment is a mechanism for the purpose of making money.
A school system is a mechanism to improve the lives of people.
Different rules for each mechanism, different goals, vastly different details and ethical codes.
5
On any given day the NY Times has half a dozen articles supporting global "free trade" and now they, and the dominating faction of the Democratic Party, decry any attempts to rein in the excesses of our ravenous global capitalists whose economic power has grown so large that national borders have become constraints.
This situation was the creation largely of Ronald Reagan and Maggie Thatcher. It was the brainchild of the Right. At the time, Left-leaning thinkers were strongly opposed to the breaking down of national barriers. (We're vilified as protectionist now, and pandering to "nationalist" tendencies.)
To those who don't recall that the Democrats once supported healthy protectionism I refer to the 1996 book, "The Case Against the Global Economy and For a Return to the Local", with essays by such thinkers as Jerry Mander, Helena Norberg-Hodge, Vandana Shiva, Ralph Nader, and Wendell Berry, among others.
Many Americans are now hurting, as predicted, without the background to grasp the forces causing their pain. Trump has tapped into that pain and is now using it for his own ends.
This could have been averted in the early 90s, but Bill Clinton and his circle decided to ally the Democratic Party with Wall Street, in its successful attempt to wrest political offices from the GOP. His strategy worked. Unfortunately, it is now apparent, the bankers were, and still are driving the car. The GOP and DEMs are simply passengers, taking turns sitting shotgun.
31
SCOTUS has had a Republican appointed majority dominating for more than a generation. Until that changes, it will be business over labor and wealth accumulation for the top 10% over economic security for everyone else.
45
Regulation has been the problem. Large companies can deal with the regulatory burdens of sarbane oxley, of GDPR, of ACA. It’s the smaller companies that suffer.
2
Evidence?
What people lose sight of is the fact that when you lose local factories and businesses, you lose local wealth. It all goes to Seattle or Bentonville or some other far away place. All you're left with is low-paid, non-union hourly workers and everything falls down from there.
We're not only standing by and watching the decline of the American lifestyle, we keep voting for the people who are causing it and not demanding anything better. At some point, it's not a government problem, it's a citizen problem.
87
The leadership of BOTH parties are far too aligned with with global capitalists. The American citizen has very little choice.
We have to find some way to break that stranglehold and I've no clue how.
15
Losing local wealth is what I refer to as " the money leaves at midnight ". When this happens there is less to no money the next day for local investment, investments that include small business and local infrastructure.
All three branches of our government are controlled by big business.
Neil Gorsuch was installed on the Supreme Court Incorporated to guarantee that this policy continues.
It will take a lot more than we are probably capable of to rid us of the Oligarchs.
Corruption is all that is holding our government together.
252
Supreme Court justices can be impeached.
2
We greatly outnumber the elites but the trick is getting people in the middle and lower working classes educated about the reality of corporate capture and its hazards and organized to challenge it in a sustained manner. This is extremely difficult. Most Americans are still brainwashed into believing that challenging the unfairness of our economic system is tantamount to socialism and is therefore untenable. The elites also retaliate against progressive activists. You can’t protest wealth and income inequality if you’ve got to go to work to keep afloat. You can’t protest if you were fired for planning to join a protest. I was so saddened that the Occupy Movement appeared to quickly fizzle out. We must sustain such a movement for years if we are ever going to break through and wrest control of our government from the wealthy elites.
1
The mantra remains as it always has-What’s good for business, is good for America
5
I would like to shop at small stores and businesses but I found that they rarely had what I needed or did not keep items in stock. They would order for you sometimes but it could take a while to get the item.. Specialty items like drill presses and corresponding drill bits are very hard to find in Maine without paying an exorbitant price. I build computers on the side but hardware for these is hard to find locally and many places do not have knowledgeable people. The good online stores seem to offer better customer service and are more knowledgeable about products. A good local store is hard to find except for food, clothing etc.
2
Here are a few examples of how the public looses, all provided by friends, and all true. In the 1990's a local suburban hospital merged with another large hospital. Some specialists lost jobs. Disgruntled patients scrambled to find alternatives. Physicians joined together to fend off hospital mergers. Health insurers merged and cut reimbursement. Physicians started to see more patients in less time. Winning yet? Employment is another example. Are mega companies hiring STEM professionals, or just advertising in order to get internet "hits'? "Internships" are de rigueur regardless of qualifications. When and if a position becomes "open", candidates are recruited from select colleges only. No one else need apply. Experienced candidates find they either have too much or too little experience for the mega company. Family stability is affected by business mergers. Mid level managers survive by becoming economic refugees, moving from city to city where ever they are "needed". Take a plane to that new job? Flight attendants loose years of seniority when airlines merge. Use credit cards to buy groceries because there is no raise? Banks charge interest rates that were once the purvey of the mob. The list goes on. Really, are we winning yet?
65
Very informative article. Another thought: the smaller businesses are more likely to be family run and therefore consider long term viability of the company for the children and grandchildren. Versus some of the large companies where the CEO types apparently now believe their responsibility is keeping stock prices high and therefore use money to buy back stock instead of product development for the future. Consolidation is just an easier way for company elites to grab money out of the country.
20
Only governments are large enough to stand up for consumers against monopolies and only governments have the mandate to do so.
Business plan are driven by share price from quarter to quarter. Only governments have the long-term perspective to invest in the public infrastructure and education needed for companies to thrive.
Capital stands in tension to labor in the short-term, but counts on government to maintain a supply of healthy and skilled workers and consumers.
As has always been true, when government is captured by elites and is not accountable to its people the end result is not ever greater wealth for the elites but revolution.
Ever since the 1980s when Republicans adopted the inane and repeatedly debunked falsehood that tax cuts pay for themselves Americans have been cannibalizing the investments of previous generations in infrastructure, education and justice for all. Workers have been paying the price. Now those reserves have been drained. Even though they are the last to suffer, this cannot bode well for big business.
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"A government that wanted to reduce the power of big business — through a combination of new laws, better regulation and different judicial appointments — could do so. Here’s hoping we get such a government sometime soon."
These very same corporate giants are the ones who essentially buy members of congress with huge campaign donations--who then write laws to enable these corporate giants to get away with almost anything. So it is highly unlikely that we'll ever change our government to limit such behemoths, as there is no way that congress will ever create laws that constrain themselves--so there is no way they'll act to remove the money factor in politics.
“The greed of power drowns our ethics.”
― Henry Johnson Jr.
32
It would be interesting to also understand the distribution of retirement benefits weather it be 401K, some other defined contribution or defined benefit plans; and also the distribution of company paid health plans. The would indicate the overall level of benefit to the average American.
To someone who moves from working at a local bike shop to a global bike manufacturer, this could be awash in base salary and a boon in benefits.
Interesting. Leonhardt's solution to managing this change in the workforce involves government intervention at various levels and in various ways.
There remains a viable alternative which I describe without actually advocating it. That is for workers to self-organize in large companies for their own protection and to gain power to influence media and government. Both with and without unionization, such organization is the only practical response to the collective power of large businesses to control workers' lives.
Big companies, especially media and IT companies, wield power far beyond the paycheck to protect themselves and each other from worker influence. That is part of the reason unions have performed so poorly since the 1960's. But if individual workers feel helpless within their companies, looking to government will only lead to solutions that benefit governments first.
It may be that the best weapon for such organization today is not unions, but social media in its ability to reveal dirty corporate secrets and bring mass attention to hidden policies and practices. You work for your company, so perhaps it should likewise work for you.
7
"It may be that the best weapon for such organization today is not unions, but social media in its ability to reveal dirty corporate secrets and bring mass attention to hidden policies and practices."
This assumes that the consumers of that social media will actually react to news of dirty corporate secrets.
There's a numbing deluge of news about shameless thievery and people seem to be getting used to it.
"Larger companies simply have more power — to compete with other giants, to restrain workers’ pay, to influence government policy and, in the long run, to increase prices."
There's one more unspoken item in this laundry list - the power to stifle small competitors, or even to ensure they never come into being.
Adam Smith's name was hijacked by the political right to make him its patron saint on the strength of one phrase about the invisible hand of the market. What they leave out is his warning about two or three businesses getting together to conspire against the public. It was meant to alert us to the threat of unrestrained capitalism. Media and communications especially are succumbing to this threat. Where is today's progressive equivalent of the trust-busting Teddy Roosevelt?
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@ mancuroc
Excellent comment! Thank you.
1
It has somehow come about, that Amazon with their order anything online, and have it delivered quickly, has accelerated the trend of not patronizing local stores. And consider Walmart and Costco, and so many Americans just want to support very large companies who have low prices. It is going to be less choice to shop with smaller competitors in the future if those behemoths gain more market share. People should consider the results of their choice to buy from these companies. Hopefully Macy's and their parade for Thanksgiving will survive. It would be a nightmare to have Amazon do a parade of drones on tv.
10
There is no doubt whatsoever that the Reagan era was the pivotal point in America's history whereby we saw the beginnings of the takeover of the country by big business and Citizens United put the last nail in the coffin of any attempt to be able to stop it. Corporations now had complete control over the system and the politicians who designed legislation to serve strictly the interests of their corporate masters.
All of this is horrific enough, but, when we see the firing of a long term employee and political cartoonist from a Pittsburgh newspaper because the owner feels the criticism is too offending to the President he supports, that is even more dangerous in that with further and further consolidation of the media, the corporate powers are also now in control of what Americans see, read and hear and in reality, the takeover is complete.
The American Revolution was fought to rid the newly formed country from tyranny. It would seem inevitable that in order for the country to rid itself of the shackles of this plutocracy and powerful interests and give it back to the people, the only way is 242 years later an American Revolution(Version 2) will have to be fought all over again.
231
Thomas Jefferson said you need a revolution every 200 years or so to throw the bums out. We are 42 years overdue.
3
Let's not forget the role government plays in market consolidation.
I'm a solo practice family physician in rural WA. Prior to the passage of the HITECH Act in 2009 (Electronic medical records mandate) and ACA in 2010, about 65% of all primary care docs in WA were solo practice. Today, only 4% of us remain.
At the time, the Obama administration touted consolidation of the health system arguing it would lead to efficiency and better patient care without a shred of evidence to back it up. Today, the healthcare system is as fragmented as ever, outcomes are generally no better (save teen pregnancy rates), and costs have risen considerably.
Being a successful small business owner was always a dream of mine. It felt quintessentially American. My parents were small business owners. I wanted my kids to be small business owners.
Sadly, that part of the American dream seems to be fading away.
23
“Hoping” that we get a better government is not quite enough. Folks don’t fathom our dire circumstances, economically, politically, and environmentally. They don’t see that the USA is in a requiem stage for the American dream.
The USA is not a country, it is a corporation. It is not a collection of laws and individuals, it is a collection of companies. Improvement won’t happen until we exchange the obsession for profits with quality of life.
It’s going to take a social revolution to turn around this catastrophe. Rising from our drug-like stupor is going to be really, really hard.
321
The 'drug like stupor' has been intentionally induced. No revolution anywhere, any time soon.
1
Hear! Hear!
Well said.
My theory is that Donald Trump frightened so many of the educated because we've worked in corporations where we've seen him over and over.
Most other people didn't hear the dog whistle that marked him for the fraud he is.
2
I agree, it will take a revolution.
2
Size counts but:
1.demise of unions and weakening of government protections
for workers
2. ability to move -ANYWHERE
3. antitrust unenforced
4. computers, mechanization,changing technology means less
workers
5. control of federal/state/local governments to bribe,
cajole,manipulate, legislate,threaten to get their
way or small folk to face Armageddon
Yes, size counts and it aint good for 90% of the population
The Luddites were 200 years early. The biggies aint sharing.
19
When America was great and we were heroes, Eisenhower was President, monopolies were illegal, and the marginal tax rate reached as high as 95%. This was the decade that made landing on the Moon possible in the following decade.
We have lost all of this, including the respect of the world. I blame Ronald Reagan mostly, but Republicans in general.
511
Reagan in USA and Thatcher in Britain made the crucial changes. Before they came to power the incomes of the rich and the rest were rising at the same percentage rate though that meant the rich were getting about 40 times more than the median. Since Reagan the rich have continued to increase income at roughly the same rate as before but the increase for the rest is virtually zero hen inflation is taken into account. Thus the difference in income is now hundreds of times.
7
How about corporate democrats who sold out for campaign cash from their own oligarchs? After all, it was Bill Clinton who signed the repeal of Glass Stegall, began the expansion of NATO thus preserving militarism, and bombed Serbia.
Agreed! The consolidation of business has not just been a natural phenomenon, but has been brought about by Republican policies. As such, we have the ability to turn this around, even though it won't be quick or easy.
We need a progressive business tax (a higher rate on, say, any net income after the first million) and a tax credit to support small business (say, a per-employee credit for the first 50 employees) to help level the playing field for smaller businesses.
Vote Democratic in November, then write your legislators, plus Ron Wyden (top Dem on Joint Committee on Taxation) and Richard Neal (Top Dem on House Ways and Means Committee) to demand action.
2
Time to end corporate 'personhood'. Since 1893, this fact alone has allowed corporations to have a larger voice and more effective political power than any group of individual citizens. We're just now beginning the end game of all this soft-power. We must start taxing companies the same way we tax individuals; the more you make the larger your percentage. (right now - we have 1 tax system for individuals and another for companies) Indeed, the only deduction that companies should get is if it actually creates jobs and the effective salary those employees get. We need to remove money from our political system, so these corporate 'persons' cannot have a bigger effect than ordinary people, and (because of the existence of a corporate board) allows board members effectively to have more than a single voice; something you and I do not have, thus making them super-citizens. I'm sorry, but the Constitution does not elevate anyone over anyone else for reasons of wealth, race, religion, or gender. This fact needs to be demonstrated vigorously to the wealthiest and to corporations.
187
I sure would like to be taxed on my net profits rather than my income....
1
One corporation - One vote!
Please see House Joint Resolution 48 -- now with 56 co-sponsors: https://www.congress.gov/bill/115th-congress/house-joint-resolution/48
If you like it, join the non-partisan group at www.movetoamend.org and help us get companion legislation introduced in the Senate.
The increasingly monopoly-dominated American economy is a ripe political issue. Polls show Americans are deeply concerned about this trend. Why then, has neither of the political parties taken it up? The short answer - because all of these companies fund the parties. There's no incentive for Democrats or Republicans to fight for the consumer.
68
I don't think so, Shane. I think it's because Democrats can't figure out how to make the issue compelling to voters.
Yes, money plays too big a role in our politics, but politicians want to win. If they can devise a way to market a winning issue, they'll do it. Their wealthy benefactors will wink and smile because they know that, in the long run, they'll benefit from having pet politicians on their team.
1
That is not quite fair to the Dems, who have not had power for the last 7 years. I am not sure the blame falls equally.
1
And with the oligopolies, comes the total demise of customer service quality. Just look at the airlines or cable companies..
61
Our tax structure's generous treatment of capital gains greatly encourages the creation of large businesses. Imagine you have a successful medium size business. You have two choices, pay dividends to your stock holders or buy another company. If you choose the first option, your company pays tax on the income and your stockholders pay regular income tax on the dividends. If you choose the second option, you can probably write off a large fraction of the purchase expense, your stock price will go up, and your shareholders will pay capital gains tax at half the rate.
And as a corporate executive, the tax code greatly encourages you to take a large fraction of your compensation as stock options. Again, the way for this to really pay off is to make your company bigger.
If we want the small players to have a chance, we need to change the tax code to treat all income the same.
132
The bigger the business the fewer significant competitors and the more profitable and consistent returns on investments, the more attractive to stock buyers. In addition, big companies can afford to take on projects with significance risks in sufficient numbers to avoid being ruined by some that lose money because they have more that make money. Remember the rational risks of business ventures are based upon actual outcomes—90% success rates mean 10% loss rates. So there are big pressures to be big. But it’s not good for society as a whole.
Buyers or customers of bigger business do not have enough strength to deal fairly with them. Customers can end up forced to pay what businesses decide for products that the decide that will be offered. The wealth of society becomes the property of the biggest businesses and the great mass of people end up unable to develop opportunities which would enable them to create new businesses and innovations.
17
It’s all about taxes.
A small company cannot employ armies of tax consultants to legally manipulate the tax code.
Ever see the phrase ‘effective tax rate’? It’s only used by large companies and it’s ALWAYS lower than the statutory rate.
231
A small company can't WRITE tax laws that the big companies pay their "representatives" to write.
4
The courts, with decisions like Citizens United and others, have facilitated the power of big business. Some of this is disingenuously done in the name of free speech that was intended to preserve public political discourse. Those businesses have the money to buy the best financial advisors and lawyers--some trained within the very agencies they undermine. Those businesses can pour millions into influencing court cases and legislators.
We see this every day. We see it in our opioid epidemic with the lobbying power of pharmaceutical firms and others: https://www.cbsnews.com/news/60-minutes-ex-dea-agent-opioid-crisis-fuele... . Our laws are twisted to the advantage of the wealthy corporations. This is not so much a shock as a profound disappointment.
Even if we could engineer changes, it will take decades. But where will the tenacity and the money to engage come from? All the economic clout is in the hands those already so adept at protecting their own interests--at the expense of the broader citizenry.
There may be some exceptions, a few businesses and social programs that can succeed, at least on a modest level. They will get publicity--but can they influence longstanding , deeper trends? They are long behind and at serious disadvantage.
44
Spokesmen supporting such mergers will always tout economies of scale, removal of overlapping functions and either vertical or horizontal efficiencies. Sometimes this works, and the c-suite and shareholders gain; sometimes this fails and the shareholders lose. Workers overwhelmingly get short shrift all the time.
The more interesting issue is that mergers have in recent past simply been the chosen action because the companies do not know how to innovate and produce a new product, and if they do know how, they judge it too risky.
Often it is the case in CA that Alphabet or Qualcomm or some such behemoth will watch a bunch of startups and snag the one that produces results first. But in the case of ATT, there seems to be not even that kind of product advancement. It is simply a case of twisting the finances in their favor. With the money ATT is spending on TW, including over $400M to the TW chief, ATT could provide 2/3rds of the unserved parts of the country with a fiber connection. Wow, more subscribers! Anybody else remember when companies produced better goods that people wanted?
Unfettered capitalism will always lead to huge monopolies or duopolies with power to effect people and governments. As the columnist says, its not going to fix itself without that we and the government say 'enough'.
111
I would force AT&T as a condition of the merger, to wire rural and low income America for broadband AND charge low-income citizens no more than $25 a month for internet access which is now a requirement to be part of society. This should be the obligation for being granted using public airwaves/spectrum.
2
Your comment about the time when companies produced better goods that people actually wanted really caught my attention. I continue to use linens, furnishings, appliances and clothing that are 20 to 30 years old, because of their quality and durability. Everything that I have attempted to buy since about the year 2000 is of low quality, and this trend has become significantly worse over the last five years. My husband and I just won't spend for the junk that is on the market today. This is one more way that giant corporations have wrecked quality of life.
Our small business licensed our patented technology to a large corporation that subsequently was acquired by an even larger private equity company. They expanded their sales, market share and profits with the unique feature that our patented technology provided for them.
However, they refused to pay our royalty. They even refused to allow, as our contract provided a right to to do, a third party accounting firm to audit their sales, at our expense.
In a blatant falsehood, they simply said they did not agree that our contract gave us the right to conduct an audit.
In other words, just to get an audit, we would have to sue them.
But the process of suing, which is not what we wanted to do, (we simply wanted an audit to confirm the amount we were owed), would lead to a legal battle, (they had internal lawyers), that we could not afford to lose.
The company is based in NYC. If anyone knows if there is an alternative approach to get our audit, please let me know. Our attorney does not believe so. The amount in question is in the $5 million range.
This is how big companies devour small ones.
362
Known as "The Trump Strategy," it is destroying our country's small businesses and in the process destroying its character and personality. Thanks, GOP.
2
Sell a % interest in your patent (or just the award) to someone like Myrhvold's patent portfolio group. They may relish the exercise as a way to remind private equity who really owns IP. The publicity might be all they want out of the suit, and help them buy up more patents by driving small patent holders into their portfolio. Entirely depends upon finding the right firm that shares your interest, albeit seeing it more generally. Perhaps you're bringing them a solid and very simple case about royalties rather than ownership so they don't have to build a case on their own from among all the myriad patents they hold.
Let us know through Mr. Leonhardt how it turns out. Good luck with this.
https://www.cnet.com/news/inside-intellectual-ventures-the-most-hated-co...
2
Sounds like you need a lawyer to sue them for breach of contract and fraud, and ask for a jury trial.
1
Using Amazon as an example, most of these jobs are one step above serfdom. The majority of these workers are not code-monkeys or marketing gurus. The jobs that were replaced were well-paying manufacturing positions where people could take pride in their work and where their earning stayed in the community.
I'm still puzzled though where all these workers are, physically. Go into any football stadium-sized CVS and you see three people working, where the twenty stores it replaced would have employed a few of dozen.
114
You cannot lay out a theory or even have a discussion about business without talking about the internet, and in particular net neutrality.
You skimmed over it in your article; '' The supermarket is Whole Foods, which is now owned by Amazon. '' - this should be your first and only clue.
The entire world is going to be shopping online (even from brick and mortar stores), because there is the prevailing feeling that a company can offer something that is bought in extreme bulk far cheaper than any other. (usually from said Amazon)
Now factor in this administration that is trying to end net neutrality, and any small business is looking at markedly higher rates to even reach their potential customers.
The large will only become more gluttons.
174
I will always find the time to go to the grocery store to buy our food. I enjoy the produce and deli departments, I want to see that package of meat before I purchase it, I read labels, and check items for expiration dates. Oh, and talk to people also.
Most confusing, however, is that there continues to be new stores and shopping centers being built (often on virgin real estate) while older ones sit empty and idle. All a monument to the American penchant for unbridled consumerism and the desire to spend every last dollar, borrowed or otherwise.
16
@Charles
I'm with you mate. I have not purchased a single thing online other than concert tickets, nor have I have set foot in a big box store, other than IKEA. (I rarely even set foot in a mall )
I too enjoy shopping with the smells, sights and actually touching the products. Indeed, if you have the gift of the gab (as I do), then you want to congregate with people as well.
The internet was suppose to bring us together, but in many ways it has driven us apart.
When you shop online and think you are getting a bargain of a buck here or there, you cannot see those ghost malls becoming more plentiful. You cannot see the boarded up small businesses and the people that are now out of work.
You are too busy looking down that you cannot see your work being consolidated more and more, that soon your ''choice'' will be subject to the conglomerate.
They are going to dictate how and what you consume, and then the deals you think you were getting will cost much more than previously, because they will have shut out any alternative. (especially for the internet shoppers as I have mentioned with net neutrality being eliminated)
Eventually, there will be nothing left to buy as we will have consumed everything on this planet.
1
Sorry to tell you this but net neutrality ended last week.
1
The small book stores went to Borders.
The little pet stores went to Petco.
The local drugstore went to CVS.
Etc.
the country is going Big Box.
36
It was going Big Box. But it’s now going Amazon.
And some (very few) are good employers---- Costco for example.
1