“The Bigger, the Better?”

For over 100 years the slogan, “the bigger, the bet­ter” has guided the busi­ness community.

Even today, few execu­tives would question the validity of such a slogan. Banks with assets exceed­ing $30 billion, oil compa­nies with sales over $30 bil­lion annually and insurance companies with millions of policyholders are believed to be big because they are better for consumers and the country.

ARE THEY? Let’s look at the bigness issues a little more closely:

1. Smaller companies can do a better job for the con­sumer than the giants are doing in the same industry. This is true, for example, in the pricing of life insurance or servicing by truck companies. Small busi­nesses, whose owners know they can win under fair competition, are unable to fight the political and predatory market practices of their opposing goliaths.

2. Companies can become so large that government cannot allow them to fail. While small business is per­fectly free to go bankrupt, big business can go to Washington — for a bailout. Apart from the more sensa­tional welfare case of the Penn Central, big corporations are in Washington all the time asking for hand­outs on the grounds that if .they don’t get them they will go broke and damage the economy.

3. Giant corporations very often mean giant mo­nopolies or giant monopolis­tic practices, which fleece consumers out of billions of dollars, as detailed by the Senate anti-monopoly sub­committee over the years. Frequently big business forces small business to go along with their anti-mo­nopoly violations.

4. BIG corporations, his­torically without much of an innovative record, just as historically have lunched off lone inventors or small firms. A Department of Commerce study in the mid-’60s showed that individuals were the source of most inventions that helped build the economy-, not the fabled corporate laboratories.

In 1964, Donald Frey, vice president of Ford Motor Co., noted that auto suppliers, not the big auto companies, were the prime source of innovation.

5. Big corporations gravi­tate toward massive tech­nologies because it is more profitable for them and more expensive for consum­ers. Recently, big technology is more likely to induce tax concessions or govern­ment subsidies.

In the quest for energy adequacy, why develop the abundant agricultural wastes and residues or other solar energies when there are more complex, expensive and government supported technologies like nuclear power around?

6. BIG COMPANIES can resist more strenuously the displacement of their exist­ing technology by a more abundant form of new tech­nology that is cheaper for the consumer. AT&T has preferred underseas cables at the expense of satellites; the three television net­works long opposed cable TV development with its dozens of channels.

7. Big companies can con­trol government and abuse significant political power more easily. DuPont in Delaware, Union Camp in Savannah, Ga., and U.S. Steel in Gary, Ind. are only a few of the company states or company towns where bigness becomes virtual government. It is hard to think of small business overthrowing South Ameri­can countries.

8. Conglomerate compa­nies can afford to ignore one consumer sector if they can profitably shift to other consumer sectors, com pared to firms rooted en­tirely in a smaller community. In such a case, only small business can fill the gap.

9. Large corporations en­courage widespread com­munity rootlessness by re­quiring constant moving of families between branch of­fices or plants.

10. Big companies are more likely to be inefficient than smaller-scale alterna­tives. Prof. Joe Bain has shown how, in several major industries, it is plant size, not company size, that determines efficiencies. The steel industry is a case study of that point One giant publisher recently contracted for a series of books to a tiny publisher be­cause it was cheaper than doing it in-house.

THE WHOLE question of efficiency needs a fresh re­view in other contexts as well, such as the side ef­fects, maintenance costs, or injuries to consumers.

There need not he a re­verse dogmatism in favor of all small enterprises to justify a critical examina­tion of business bigness in our economy. Or to justify asking what such bigness is doing to our society’s preferred values of individ­ual initiative, responsibility and freedom from the giant organizations’ conforming pressures.

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