Is Big Business Sustainable?

As the following NY Times article suggests, businesses with market power ( the ability to set wages for the sector, the ability to set prices, the ability to crowd out start-ups) may be undermining their long-term success.

Many businesses operate with the belief that if they can dominate, they can grow and profit unimpeded.  Indeed, for a while, sometimes even a decade or more, this may even be true, returning shareowners a hefty return.  But after a while, the lack of new business start-ups becomes a drag on the economy.  New businesses are the engines of growth.  They provide the most new jobs, an outsized portion of innovation and new avenues for exploration, and have been a key path for immigrants and the lower classes to rise to the middle class.

Without this growing crop of new businesses, there becomes no growth in customers for the large dominant companies.  As Walmart famously learned, if you force all other businesses to fold, and prevent new ones from rising, there are fewer employed people to shop at your mega-stores.  If you set the wage standard to below subsistence, no one can afford to shop at your mega-store – not even your own employees!

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