Big Is Beautiful: Debunking the Myth of Small Business
by Robert D. Atkinson and Michael Lind
MIT Press, 368 pp.
Small businesses have been a vanishing part of the American landscape for decades now, and the trend seems only to be gaining speed. Between 2005 and 2015, the number of small retailers--those with fewer than 100 employees--fell by 85,000. That's more than one in five. Small manufacturers likewise saw their ranks shrink by over 35,000, a drop of 13 percent. A mere twenty years ago, local banks and credit unions accounted for nearly half of the banking industry. Now they make up only about one-fifth. And so it has gone across most industries.
The shuttering of existing businesses is only part of the story behind these figures. There's something else at work, too: we're no longer creating new businesses at the pace we once did. The number of new firms launched each year in the U.S. has fallen by nearly two-thirds since 1980. This drop-off has paralleled other stark trends, including stagnating wages, growing inequality, and a widening gap between the fortunes of a few thriving metros and the persistent malaise that has taken hold in other regions. All of these trends began around the same time, and recent scholarship suggests that they may all be a consequence of the same root cause: nearly every corner of the economy, from milk processing to hospital care, has become dominated by an ever-smaller number of ever-larger corporate giants.
In Big Is Beautiful, Robert D. Atkinson and Michael Lind have delivered a book designed to put our minds at ease. We should welcome the demise of small businesses, they argue, because "the facts are eminently clear that on virtually every measure, big business is superior to small." At a time when there's growing concern that large corporations have achieved their dominance by bending markets and government policy to their own advantage, Atkinson and Lind offer a different explanation. They contend that the chief driver of rising concentration is the inherent efficiency of bigness, abetted by technological progress, which naturally favors bigger corporations.
There are legitimate debates to be had about these issues. Some industries do require large-scale production, and there are things that bigger firms can do that smaller ones can't. At the same time, small businesses often provide important consumer benefits that large firms simply can't match. Efficiency is important, but it's easy to overlook impacts that are harder to measure, such as the cost to communities of absentee ownership. And while technological change may spur centralization, it can have the opposite effect, too: it has made distributed solar a more economical choice than big coal and nuclear plants, for example, much to the consternation of large electric utilities.
A book that offered nuanced insights about the role policy should play in navigating these dynamics would be most welcome. This is not that book. Atkinson and Lind are not interested in meaningfully engaging with hard questions. Their purpose, rather, is to shore up the status quo at a moment when doubts are creeping in. They aim to dismiss concerns about the decline of small...