I was recently quoted by Kauffman Foundation regarding what systems changes I would prioritize for the economy:
Limit company size. Crazy, I know. But once an economy has companies the size of Walmart, Amazon, or Google, you inhibit the creation of small businesses. Those small businesses are less efficient, but employ more people and directly help their community. Need proof? Look at Walmart’s effect on small town main street.
– Taylor Clark (me)
Let me first say that I’m not some crazy anti-capitalist. Actually, I’m the opposite. Obviously, it’s not perfect, but I’m a huge believer in capitalism for many reasons, primarily for its ability to lift people out of poverty.
Is the world better due to massive companies? I don’t have a strong answer yet. The longer I work on Community Ally, the more I see the importance of the role businesses play in supporting healthy communities. Massive companies can provide massive efficiencies due to scale. They can also provide services that a small company would never be able to due to funding requirements.
My quote focuses on the ability of American corporations to get so large that they damage communities. Is Walmart good for providing a huge number of products at low prices? Or is it bad for causing the closure of mom-and-pop stores? In my opinion, Walmart has a net-negative effect on American communities. Instead of profit going into the community via local business owners, it gets vacuumed up to Bentonville, AR, and shareholders. Here’s a more trustworthy article than my uneducated opinion:
https://www.businessnewsdaily.com/2405-real-cost-walmart.html
I don’t mean to pick on Walmart. The question of companies getting too big is on a lot of people’s minds right now. We just saw Apple, Google, Facebook, and Amazon in front of the House Judiciary Committee at the end of July (2020).
What if we had some wild system where once a company hit a certain market cap, the founder/C-suite/board was given a presidential award before being completely shut down, and all the employees were let go? Those employees would then be free to rush to create new companies providing similar services to fill the void created by the closed company. The goal would be to keep companies smaller and hopefully more local, in the sense that they keep money circulating where they operate, rather than sucking money out of communities and into the hands of the few who are removed and far away.
Update Feb 14, 2022: Found a fascinating, yet old-ish, article related to growth of companies:
https://hbr.org/2002/12/the-consolidation-curve
The growth is very natural, but does that mean it’s good? Or just easy/appeals to our worst nature, greed?