By Kevin D. Williamson
Sunday, February 03, 2019
Our politicians reliably fetishize two constituents of
American life: the middle class and small business. The Democrats used to talk
a bit more about the poor before they became the Harvard party — poor people
are lousy donors, as it turns out — and the Republicans used to be a lot warmer
toward Big Business before the GOP became a right-wing farmer-labor party and
Big Business came to mean Howard Schultz, Mark Zuckerberg, and Lloyd Blankfein.
But the fact is, America needs Big Business — maybe more
than Big Business needs America. There are lots of markets out there.
The relationship between Big Business and small business
is complicated. Big Business now employs the majority of American workers, and
a lot of small-business employees are Big Business employees at one degree of
separation, working for smaller firms that get most — or all — of their sales from a single client, usually a much larger
firm. The textbook example is the automotive industry, in which smaller
companies provide specialized components and services to the big marques. Which
is to say, Big Business relies on smaller businesses for inputs — about 25
percent of the inputs for big U.S. businesses are supplied by small U.S.
businesses, according to a Business Roundtable study.
It is a delicate ecosystem, and the political desire to
lean toward one group of businesses at the expense of others — for reasons that
have a lot more to do with rhetoric than with economics — helps no one.
“Job creation” is a questionable metric — abolishing
high-tech agricultural equipment would create a lot of jobs but leave us no better off — but the numbers are worth
appreciating: The biggest 1 percent of U.S. companies create about a third of
the new long-term jobs. Big is beautiful, and so is new: Successful startups
have for years made the difference between positive and negative net job growth
in the United States. Big businesses pay better, offer better benefits, and
offer more-stable long-term employment than their smaller cousins. And the
small businesses that have the biggest impact on wealth, wages, and employment
are the little ones that end up being big ones: Apple, Google, Microsoft,
Facebook, Amazon.
Big has its advantages.
The good news is: We’re really good at making Big
Business work, and making it work for us. Just how good we are at that is
something few Americans appreciate.
Of the world’s 100 most valuable companies, the majority
— 54 — are domiciled in the United States, according to a PwC report. Nobody
else is even close: No. 2 is China, with a bare dozen. The United Kingdom
boasts five. In 2009, Japan was home to six of the world’s 100 largest
companies. Today, it is home to one. Continental Europe combined has only 16 of
the largest 100: four in Germany, four in France, three in Switzerland, two in
Spain, and one each for Belgium, the Netherlands, and Denmark.
Most of those big European companies have something in
common: They are elderly. The biggest
U.S. firms are relatively new high-tech companies: Apple, Facebook, Alphabet,
Microsoft, with only a few old-school companies such as Johnson & Johnson
and JPMorgan near the top of the list. Europe’s biggest companies are corporate
geezers such as Unilever, NestlĂ©, and Roche. Quick: What’s the most important
German technology startup from a global point of view? Daimler? Bosch? Some other 19th-century company?
There are no European companies — zero — in the top ten worldwide, eight of which are U.S. firms.
The United States is home to the biggest, most valuable
companies, which are getting bigger and more valuable faster than those in any
other country. The market-valuation gains for those U.S. companies amounted to
$1.3 trillion in just one year, from 2017 to 2018. Of the 20 companies
worldwide that saw the largest market-cap gains from 2017 to 2018, 13 were U.S.
companies. Zero were European companies. Zero were Latin American companies.
Zero were Canadian companies. Zero were Middle Eastern, Japanese, Indian, or South
Korean companies.
From the 2008–09 financial crisis to 2018, the U.S. firms
in the top 100 worldwide added about $8.6 trillion in value — nearly five times
what their Chinese counterparts did and 28 times what those of Europe’s best
performer, Switzerland, added in the same period. The big U.S. firms added 41
times as much value as those of the vaunted economic powerhouse of Germany. Of
the 20 firms worldwide that added the most value in those years, 15 were U.S.
firms. One — Anheuser-Busch InBev of Belgium — was in Europe. Only two were in
China.
European firms show up on the list of companies that lost the most value in that period:
Roche, Sanofi, Siemens. So do a bunch of rickety old American companies:
General Electric, AT&T, Procter & Gamble, Walt Disney, IBM, Philip
Morris, and PepsiCo.
Robert D. Atkinson and Michael Lind make the case for
bigness in Big Is Beautiful: Debunking
the Myth of Small Business, reviewed in May by Cato’s Ike Brannon, who
notes the authors find that Big Business has “proven to be better at achieving
all that both the Left and the Right deem important to the U.S. economy: Big
businesses pay higher wages, provide better benefits, have higher worker
productivity and more innovation, do more research and development, export
more, and achieve more in terms of environmental protection, worker safety,
training, tenure, and diversity. In short, if the Left and the Right were to
examine business solely by outcomes, both would more forcefully advocate that
the government do more for big business.”
But Big Business doesn’t so need a positive advocate in
government — the absence of outright active hostility toward big,
globe-bestriding firms probably would do. The members of the 2020 Democratic
field are at the moment feverishly trying to out-radical one another when it
comes to class warfare: Senator Warren proposes gradually expropriating the
assets of wealthy Americans, Senator Harris talks about raising corporate
taxes, and Senator Sanders — well, Comrade Muppet, the reddest Brooklyn
socialist ever to represent Vermont, will never change. (Except on immigration.
Don’t ask him about those 2016 union-hall meetings!) Newbies such as
Representative Alexandria Ocasio-Cortez and Representative Ilhan Omar debate
among themselves whether taxes should be jacked up to 70 percent or 90 percent
and about exactly how the U.S. energy and manufacturing sectors should be put
out of business. (Green New Deal, indeed.) Poor old Howard Schultz (I.,
Frappuccino) is a candidate for crucifixion. The Democrats positively bristle
with resentment.
Big Business is not without its sins. But between Big
Business and Big Envy, the choice is not difficult. Envy never put any bread on
the table. Capital just wants to be loved, and it will go where it is loved.
The blessings of Big Business are invisible to Americans for the same reason
water is invisible to fish — but we’ll miss them when they’re gone.
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