Big business isn’t the enemy

Ryan Neely, Guest Reporter

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Over time, as our society has developed, one trend we see is that businesses have become more and more consolidated. One popular narrative is that of a chain like Walmart driving “mom and pop” stores out of business. It, however, is important to recognize why this occurs. Because of economies of scale, Walmart would likely be able to outprice the competition. A local grocery store would have nearly the same efficiency. When the cost of items, especially those as essential as food, are lower, it creates a more prosperous society.

Affluent individuals have the luxury of not worrying so much about price. This is fine, provided that they are getting a better product. For example food purchased from a farmer’s market may be more fresh. If that is what consumers value, then it is perfectly rational. However, “supporting local businesses” simply for the sake of it is irrational.

There are, however, times when big businesses can have unfair advantages. When Amazon was offered massive tax breaks for locating their HQ2 in New York City, a pressure campaign was able to drive them out. This response was absolutely warranted. These sort of subsidies make our economy less efficient. If they can’t survive on their own, then they are misusing our resources. Sure, most of the opponents of this plan were democratic socialists with a completely different line of thought, but, as they say, a broken clock is right twice a day.

Aside from these subsidies, our tax structure itself can give unfair advantages to different types of businesses. Small businesses can sometimes establish themselves as flow-through entities (sometimes referred to as “pass-through entities”), meaning their revenue is taxed as the owner’s individual income. Changes to the tax code, such as the most recent overhaul, create different incentives for businesses and consumers. It is highly concerning that our market, to some extent, is not shaped by the invisible hand of capitalism, but by overcomplicated tax gimmicks.

One more common critique of big business are their labor practices. Some say that they are “exploiting” their workers. This just doesn’t make sense though. If they could make employees work for any price, why is anyone paid above the minimum wage? The answer, quite simply, is that these “underpaid workers” (many of whom being retirees and teenagers) could not possibly be paid any more than they are without some other aspect of the businesses suffering, possibly causing them to fail. Still yet, politicians will try to raise the minimum wage, which, if ever accomplished, would simply cause unemployment and cost-push inflation. Money does not just come out of nowhere, after all.

Through the stock market, big business can also be a boon to the “have-nots”. Without them, people could not have such prosperous 401(k)s and IRAs. The success of these businesses directly helps people’s retirement accounts. That success, however, is not guaranteed. There is great risk for the entrepreneurs involved, and if not for the prospect of achieving massive amounts of wealth for themselves and their families, they would likely never choose such an undertaking.

The reason that this issue is so pressing is that Democratic party’s recent shift towards democratic socialism may these strides our economy has made in jeopardy. Walmart is one of Bernie Sanders’ favorite villians, after all. Does he have any idea how much worse off those living in poverty would be without businesses like them bringing down prices? Before attacking these big businesses, rhetorically or legally, it would be wise to understand why they exist in the first place.

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Big business isn’t the enemy