The 'Curse of Smallness' Is the Biggest Threat to Our Wellbeing

The 'Curse of Smallness' Is the Biggest Threat to Our Wellbeing
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“Bud Light: For the Many, Not the Few.” Those are the concluding words of Budweiser Light’s latest television ad campaign. One ad mocks the singular desire of a rather eccentric customer for “autumnal mead,” as opposed to the crowd-approved Bud Light. Depending on your sense of humor, the ad is funny.

Crucial here is what the ad says about successful businesses more broadly. It’s a very important reminder that big businesses are that way precisely because they meet the needs of the greatest number of people.

If anyone doubts the above tautology, they need only Google any list of the most valuable companies in the world. What they’ll see very clearly that is that the ones with the highest market capitalizations aren’t the ones that cater to the needs of a tiny sliver of the marketplace.

Goodness, Google’s best-known feature (search) is free to anyone with access to computers and internet that are increasingly accessible to individuals of all income classes. If anyone doubts this, they need only witness the internet-enabled smartphone/supercomputers that people are endlessly staring at in every U.S. zip code. Facebook alone can claim over 2 billion global users.

Amazon is valuable because it’s made it possible for those outside Beverly Hills and Manhattan to purchase the world’s plenty, all with a click of a mouse. Ditto the latter with Netflix and the access to movies that its customers enjoy.

There’s nothing wrong with businesses catering to the superrich in their approach to sales, but it’s rarely the path to billionaire status. There quite simply aren’t enough rich people. Notable here is that Anheuser-Busch InBev (owner of Bud Light) is worth $184 billion. Can any reader name the most valuable producer of mead….? For those with designs on getting really rich, they would do best by creating that which will appeal to the masses, as opposed to creating what sells very well in Highland Park (TX).

Which brings us to the latest New York Times column by Columbia law professor Tim Wu. Wu has a book coming out that’s titled The Curse of Bigness, and in it he argues that “extreme economic concentration” creates conditions “ripe for dictatorship.” Oh wow. That’s too bad. And it’s really too bad for Wu that he’s never forced to support what he so deeply feels against someone outside his rather alarmist echo chamber.  

As Wu sees it, post-WWI Germany was in particular cursed by “bigness.” The professor writes that the “monopolies soon got control of Germany, brought Hitler to power and forced virtually the whole world into war.” Wu brings new meaning to oversimplification, and in fairness to him, he acknowledges that no “one cause accounted for the rise of fascism.” At the same time, to be fair to this most-sheltered of thinkers is to let him off too easily. That other factors brought on WWII is a statement of the obvious. Absent the mark’s devaluation to one four billionth of a dollar such that every German without hedging abilities was robbed of nearly everything, we’ve never heard of Hitler to begin with. In the Columbia professor’s case, he’s typically offering up non sequiturs. The idea that fascism and war would could result from businesses expertly meeting the needs of the greatest number is less than serious.

Wu plainly dislikes big, but then he would have less reason to desire it in consideration of where he resides. Nothing against New York City, but the needs of its wondrously productive citizens have long been taken care of. The “bigness” that Wu decries is mostly an effect of businesses fulfilling the myriad wants of those who do not live in NYC. Interesting here is that Wu’s cushy life in the unreal world of tenure is an effect of the “bigness” he laments, but that’s another column, and more realistically another volume of books to easily discredit Wu’s musings about commercial achievement.

Wu writes that “we are conducting a dangerous economic and political experiment,” and that “we have recklessly chosen to tolerate global monopolies and oligopolies in finance, media, airlines, telecommunications and elsewhere, to say nothing of the growing size and power of the major technology platforms.” Actually Professor Wu, “we” has nothing to do with where we are today. Better yet, the elite class you’re part of had nothing to do with what’s happened in the 21st century. Thankfully.

To see why, we readers need only consider the five most valuable companies in the world today. One of them is Microsoft, and the feds most certainly tried to wreck it at the end of the 20th century. They did even though MSFT’s late or non-arrival to the internet, search, social media, smartphones, and countless other technological advances ensured that its dominance was soon to be shrunk by the marketplace itself.

After that, Apple was near bankruptcy near the 20th century’s end. This rates serious attention for reminding us that Apple thrives today not thanks to the policy generosity of Wu and his ilk, but because it transformed the meaning of computers and smartphones, along with how we use them. Facebook plainly wasn’t a creation of Wu’s alleged tolerance simply because it didn’t exist when the 21st century began. Mark Zuckerberg was in high school. Amazon? Visitors to its site could buy a narrow range of goods in 2000, while Google was largely unknown.

The main thing is that with the exception of Microsoft, the alleged “curse of bigness” today is an effect of what was non-existent, largely unknown, or mostly small meeting the needs of the masses in ways they hadn’t been met before. And while Netflix isn’t one of the five most valuable companies in the world, at $128 billion it’s certainly one of the world’s most valuable companies. Netflix’s capitalization is an effect of it wiping out the formerly big (Blockbuster), while at the same time profoundly changing how we watch television to the horror of the world’s biggest television networks and cable companies.

In short, Wu is yet again woefully incorrect. Searching for relevance, and for book sales, he’s introduced something horrific to make a lousy point. Where’s the outrage? The answer perhaps lies in the generalized good feelings in the world thanks to today’s big having gotten that way by improving our lives immensely. Happier will be revisiting Wu’s droolings fifteen years from now when today's big have been replaced by the relatively unknown or non-existent of the present. What will Wu say then? 

John Tamny is a speechwriter and writer of opinion pieces for clients, he's editor of RealClearMarkets, Director of the Center for Economic Freedom at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is The End of Work, about the exciting explosion of remunerative jobs that don't feel at all like work.  He's also the author of Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com.  

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