Clearly the title to this piece will be viewed as controversial, if not entirely heretical, by many readers. However, the facts (and more importantly) the economic principles here are unequivocal. “Bigger” is not better.
“Small business is the biggest job-creator in the economy.” This is such a universally known proverb of economics that the corrupt politicians of our current era still preach this wisdom, even though they practice the exact opposite: throttling Small Business at every juncture, while they relentlessly feed the insatiable maw of Big Business.
Why is Small Business the principal job-creator in any economy, and the real “growth engine” of any strong/healthy economy? This is something which is never clearly spelled-out, not by the talking-heads in the media; not by their so-called “experts”, the charlatan economists; certainly not by our pseudo-leaders.
There is an important reason why we’re never given a clear, precise explanation of how/why Small Business is so beneficial to economies. It is because once armed with such an understanding, we would understand why literally everything these Traitor Governments have been doing to us over more than a quarter century is entirely against the interests of the vast majority of our populations, and thus against the best interests of our economies, as a whole.
Small Business is so completely benign and beneficial because of both what it is, and what it isn’t. What Small Business “is” is labour-intensive. Get a small business (or several) to perform the same service/task as a big business, and the small business(es) will hire more people to do it – but not necessarily change any higher price.
What Small Business “isn’t” is a killer of competition. By its very definition, Small Business is incapable of having any detrimental impact on competition, at all. With societies filled with right-wing ideologues, continually spouting the “capitalist” virtue of competition, one would think that on this basis alone the ideologues would prefer pro-competition Small Business ahead of competition-exterminating Big Business.
But this runs contrary to the pseudo-intellectual orthodoxy pushed on us by the principle pimps for Big Business: the charlatan economists. What the charlatans would have us believe is that because of so-called “economies of scale” that bigger is (always) better. There are several arguments to make in rebutting this simplistic pablum.
To begin with, the dogma of economy of scale is only an explanation of how/why a larger company can generally produce a particular good at a lower unit-cost than a smaller (but similar) enterprise. This is all that this dogma ever demonstrated. In no way was it or could it ever be proof that “economies of scale” alone meant that Big Business was somehow generally better or more desirable than Small Business – when looked at in overall terms.
More importantly, this benefit (even the limited benefit of a lower unit-cost) is very finite. At some point, “bigger” stops being “better”, and starts to get worse and worse. This is true long before we arrive at the unmitigated economic evils known as oligopolies and monopolies. Depending on the business/industry and even localized factors, a growing business can/will/does quickly reach its optimal size. At that point, there ceases to be even any limited societal benefit in allowing such businesses to expand further, generally through various forms of Corporate welfare.
Indeed, the perils of too-Big Business were so well-known to our more-educated ancestors that they crafted some of their strongest laws to prevent large corporations from getting too large. Once upon a time; these “anti-trust laws” were rigorously and honestly enforced.
Today, with governments which are nothing but literally the junior partners (of Big Business) in government-by-crime-syndicate, these laws might as well no longer exist, as they are practically never enforced. Indeed, an entity must be a political/economic pariah, or simply lacking “connections” if it is unable to sneak some merger or take-over past our totally compliant governments, and their fast-asleep “regulators”.
Today we have corporate monoliths which are literally orders of magnitude larger than any remotely “optimal” size, with the ultimate and most-obvious examples being those hideously bloated financial behemoths which we now know as “the Big Banks”. How ridiculously too-big have the Big Banks gotten?
Even the most-ardent admirer of the Big Banks in the entire media world, Bloomberg, couldn’t stop itself from openly salivating about how much “profit” could be had, just by beginning to chop-down the financial fraud-factory which we know as JPMorgan Chase & Co.:
JPMorgan Chase & Co, the biggest U.S. bank by assets, would be worth 30 percent more if broken into its four business segments, an unlikely scenario, an analyst at Stifel Financial Corp.’s KBW unit said.
Note that there is not one word in the article indicating that there couldn’t be a lot more profit to be made, by then smashing those pieces into much smaller pieces still. This article simply pointed to the instant profit of 30% which would be available just by beginning to chop-down this obscenely large behemoth, and in the simplest manner possible.
Why would “smaller” be much more valuable, in our forward-looking markets, in the case of smashing JPMorgan down-to-size (or at least beginning that process)? Obviously a major portion of that profit quotient would have to be derived from greater efficiency. Smaller is better.
However, pointing out that even the greatest admirer/biggest cheerleader of the Big Banks has observed how we would all be better off if the Big Banks were smaller is only a start. We then come to the heinous propaganda which the cheerleaders (including Bloomberg) have dubbed “too big to fail”.
This is a very simple subject. “Too big to fail” is a pseudo-concept which is entirely antithetical to any economic system which even pretends to adhere to the principles of “free markets”. Free markets demand that insolvent entities fail, it is the only way for such free markets to heal, when weakened by the misallocation of assets (such as in the case of insolvent enterprises). No business, or group of businesses could ever be “too big to fail”.
There could never be an economic system, or economic argument where “too big to fail” could ever be a rational/legitimate policy. Put another way, no level of short-term economic harm or shock could possibly equal the long-term harm (and insanity) of institutionalized blackmail – which is all that “too big to fail” ever was/is. You must protect us, no matter what we do, no matter what the cost. Utter insanity. Utter criminality.
Understand that our own, corrupt governments embarked upon this criminal insanity long after the equally criminalized government of Japan already proved that too-big-to-fail was a failed policy. Not only could there never be an argument in favor of this criminality, our governments knew it would fail before they ever rubber-stamped this systemic corruption.
But all of these arguments against the insanity of perverting and skewing our economies in favor of Big Business, and against Small Business pale into insignificance compared to the principal condemnation of too-Big Business: the economic “cannibals” known as monopolies and oligopolies.
For readers unfamiliar with these terms because the Corporate media and charlatan economists try to pretend that these words don’t exist, a brief refresher is in order. As most readers know, a monopoly is where a single enterprise effectively controls an entire market or sector. While a “monopoly” may be desirable when playing a board-game, in the real world these parasitic entities do nothing but blood-suck, from any/every economy they are able to “corner”.
However, the majority of people, even today, are at least partially familiar with the evils of monopolies, thus the ultra-wealthy Oligarchs rarely attempt to perpetrate their systemic theft via these corporate fronts. Instead, they perpetrate most of their organized crime via oligopolies.
An oligopoly is where a small group of companies dominate/control an entire market or sector. Here it is important to understand that oligopolies are every bit as “evil” as monopolies (in every way), but the oligopoly puts a happy-face on this evil. Oligopolies represent pretend competition.
These corporate fronts cooperate as closely as possible in systemically plundering economies. How do monopolies/oligopolies rob from us? The “old-fashioned” way for these blood-suckers to do so was via simple price-gouging. When you have complete control over a sector/market, you can charge any price you want.
However, not surprisingly, the Little People tend to notice when the Oligarchs use their corporate fronts to engage in simple price-gouging. They actually begin to notice the general evil which oligopolies/monopolies represent, and that is “bad for business” (i.e. crime).
Instead, the Oligarch Thieves of the 21st century engage in their robbery-by-corporation in a different, more sophisticated/less-visible manner: via corporate welfare. What other crime can monopolies and oligopolies perpetrate, with overwhelming success? Naked extortion.
As previously explained; “too-big-to-fail” (and now even “too big to jail”) is nothing but the most-obvious and most-despicable form of corporate extortion (or simply economic terrorism): give us all the money we want, or we’ll blow up the financial sector. Small banks could never perpetrate such a crime (terrorism).
But such corporate extortion via oligopolies/monopolies is certainly not confined to the banking sector. The Oligarchs engage in such extortion (against corrupt governments which require absolutely no arm-twisting) in virtually every sector of our economies, but generally in not quite as extreme a form as what is perpetrated by the Big Banks.
Typically, the extortion which precedes even more Corporate welfare, occurs in this form: give us everything we want, or we will close our factory/business, and you will (temporarily) lose those jobs. Here we don’t need to imagine this in the hypothetical, as we have a particularly blatant example of such Corporate extortion/welfare, courtesy of U.S. Steel:
U.S. Steel Canada Inc. is threatening to cease operations in Canada by the end of the year if an Ontario Superior Court judge rejects its request to stop paying municipal taxes, halt payments into pension funds, and cut off health care and other benefits to 20,000 retirees and their dependents. [emphasis mine]
Think you have “a secure pension”? Not if you work for Big Business. Obviously we have just begun to scratch the surface on the subject of theft-by-corporation, both in this particular example, and more generally.
Part II will make it explicitly clear to readers how/why Big Business is economic cancer, for those readers who do not already find this abundantly obvious.