The Age of the Megacorp

Sayeth NewDealer:

Mega-Conglomerates and international trade are not relatively knew. They are as old as civilization. The Mega Conglomerate can be dated to the days of the various East and West Indies Companies if not before. Also Llyod’s of London. There has been international banking since the Medicis if not before.

And I am a city and urban kind of guy. I like big cities and even though I am not a complete neo-liberal like Matt Y, I do believe in economies of scale and that mega-conglomerates are necessary to produce highly-advanced goods like medicine and tons of other things on an affordable level. There are 7 billion people in the world, it would cause a lot of suffering and damage to go back to isolated agricultural communities and think even the most radical among us would find such communities mind-numbingly boring.

While I agree with ND that we cannot go back to the agricultural days nor would we want to, I think this invests a lot employment at large corporations and it’s potentially problematic to think in these terms. Among other things, reliance on large corporations portends some serious employment problems. Between a third and two-thirds of jobs are produced by small businesses. Actually, it has less to do with sheer size than it does with how new or old a company is, but that tracks with size to a degree (comparatively few large corporations are new).

It should be added that, though these jobs pay less on average than large corporate jobs, it’s not quite right to think of them in terms of shops with low-paying customer service jobs. A majority of my employers have been relatively small companies (I’ve worked at or for one, maybe two corporations you’ve heard of). I’ve also interviewed at more of these places than I have at large corporations. This relates at least somewhat to my field, but I can’t say that IT people were more than half of the staff at any of these places (I was the solo IT person at one of them). These jobs tend to be less stable than megacorp jobs, and pay less in the aggregate, but they’re extremely important.

It’s not just romanticism that has Republicans and Democrats singing the praises of small business and entrepreneurship. This is, quite honestly, one of the strongest arguments for a single-payer health care system there is. (Though, I should add, that single-payer isn’t the only approach – indeed, most plans that would move us away from employer-based health care would do us some good.) It also informs my views in the other direction on taxes and employment law.

As an economy, we can’t really rely on the multinationals. They reach a certain point and they can maintain a holding pattern, or more easily find ways to do more with less people in a way that’s harder for small and growing companies.

Will Truman

Will Truman is the Editor-in-Chief of Ordinary Times. He is also on Twitter.


  1. Will, I was thinking of a very similar post.

    We have a dangerous tendency to think of all business as the same. But when we think of or talk about small businesses as if they were megacorp, we are missing the boat.

    One way of distinguishing between megacorp and smallbiz is to ask this question: does this company pay a lobbyist directly to advocate for its needs in Congress, in rule making, at the state office? Or does it lobby indirectly, through some sort of trade association or chamber?

    Megacorp gets enough payback from it paying the lobbyist directly to make it worth paying the lobbyist directly; much of that benefit comes in regulatory capture that gives it an advantage over smallbiz.

  2. I don’t disagree with anything you said.

    I would personally prefer to work for a small or medium sized law firm where everyone or nearly everyone is on a first name basis over a Big Law firm. I try to shop at local markets and independent businesses over chains as much as possible. However, I am not like my other liberal friends who think that shopping for locally sourced food is a moral requirement for everyone and possible. An example:

    I am a big fan of raspberry jam. There is a local jam company that promises all of their jam is made in “small batches from fresh, locally sourced fruit.” They make a tasty raspberry jam but it is not noticeably tastier than any other raspberry jam. It also costs twice as much for the same amount. I imagine I am paying for the bragging power of being a “conscious consumer”.

    This is not a requirement I am going to put on people from moderate or less socio-economic backgrounds.

    • I have ended up working mostly at small places by circumstance. They are, in my experience, more likely to hire utility infielders while the bigger places often have more narrow slots to fill, and so demand x-years experience doing the job that they want to hire you for.

      I have a fondness for working for smaller companies, though by far my favorite employer was the huge corporation. But so is my least favorite (Bregna, not a huge corporation, but employees in the thousands).

    • “However, I am not like my other liberal friends who think that shopping for locally sourced food is a moral requirement for everyone and possible”

      … haha. moral requirement? Try economic requirement. Give it ten years. (n.b.: some stuff ships well, I’m talking about milk/veggies/butchered meats)

  3. Though this does seem to be a fairly hot topic for the blogosphere (I remember a series of back and forth between the usual suspects about whether small businesses are overly-romanticized or not). And I do find it problematic that huge multi-national corporations seem to act more as independent nation states than as corporations and use the as a reason to dodge taxes and other responsibilities.

    Still I love my Mac and I don’t see it as ever being an affordable local product.

    • I think a tangential issue is there is a lot of law (or proposed law) to benefit “small businesses” that do nothing of the sort. Small business becomes not a thing, but a magic phrase to utter of practically anything to give it the shine of something good.

      I’m all for small business. But I’m aware that, well, the frequently modified parts of the law and tax code rarely have jack to do with small business. Most small business owners aren’t millionaires (and of those that are, most are only millionaires if they liquidate their business). Most don’t have complicated tax structures, take advantage of offshore shelters, or do anything more than pay taxes, deduct expenses and losses, and whatchamacallit — whatever you do to, tax wise, with large up-front investments and things like degradation of equipment value over time.

      Not 401k stuff, but they’re not Apple.

      And I think that most of the conversations over “small businesses” don’t really cover the guy owning a Subway franchise, or the two-man accountant shop, or the self-employed mechanic. They don’t even cover the small 20 or 30-person consultant or contracting shops.

      But if you say it’s for “small business”, well, who is against that?

      • I largely agree but request elaboration and clarification on one factor:

        “And I think that most of the conversations over “small businesses” don’t really cover the guy owning a Subway franchise, or the two-man accountant shop, or the self-employed mechanic. They don’t even cover the small 20 or 30-person consultant or contracting shops.”

        Who do you think is covered by the conservations on “small business” then. I could make colorable arguments that a Subway franchise owner also has the advantages of being part of a national or global distribution chain plus brand recognizeablity in ways that an independent sandwich shop owner does not. He might only own one franchise but he bought into a known brand instead of going solo for a reason, possibly very good reasons. I disagree on the two-man account shop but am willing to hear your evidence. The small 20-30 person consulting, medical practice, law firm is a trickier deal because many of those people might have started at larger places and have lots of experience. There can be big money in running an elite but “boutique” firm in various industries.

        Though all of this does point to a problem about what we mean when we talk about a small business because small is relative. Blue Bottle Coffee owns 11 Cafes and a few roasters. Almost all are in the Bay Area but a few are in New York. They also sell their coffee whole-sale and have a popular coffee-table book. They are really small compared to Starbucks or Peet’s Coffee but still doing pretty well for themselves. I can think of numerous examples of similarly sized businesses. Each Metro area/region does seem to develop some local chains. Dogfish Head is small compared to Budweiser and even Anchor Steam but large compared to some Bay Area breweries who only sell their stuff in kegs to bars and restaurants and can’t afford do bottling yet.

        Interestingly I think one of the reasons we have a so-called cultural war between working-class whites and socially-liberal/upper-middle class whites is because of the small business v. large business conundrum. A lot of socially-liberal and even economically liberal but upper-middle class types are likely to work for small or medium sized companies or own them. They cannot hire many people nor do they need to. Working class-whites seem much more likely to work for and be dependent on large corporations for employment. The kind of firms owned by the Koch Brothers. My theory is that the necessary-employment relationship makes them more sympathetic with the needs and concerns of big business. Not a lawyer from Scarsdale and her Doctor or Professor husband.

        • I think he’s saying that most of the conversation about what we should do for small business is actually for big business. Like “we should give tax breaks to businesses so that small businesses can develop” when actually it’s large companies rather than small companies that are most likely to benefit from them.

          • That I agree with. I am more intune with generally liberal thoughts about the importance of supporting local businesses though. That is what I hear more of. Every Holiday time my facebook page is deluded with pleas to please shop at places like this for your holiday gifts:


            My favorite line from a New York magazine article about this local product phenomenon could be paraphrased as “people who buy 10 dollar jars of jam are different than people who make ten dollar jars of jam.” The entire relationship is more confused and symbiotic than people want to admit to because it would make them feel bad.

            By Brooklyn is a relatively new shop but it opened up in my old neighborhood. My old neighborhood was one of the most expensive in the “new Brooklyn” scene and is filled with rowhouses worth 2-3 million dollars. Many residents might work for large international companies or exclusive boutique law firms. The neighborhood is home to the first Barney’s in Brooklyn. Barney’s is the ne plus ultra of gentrification (fancy department store that sells clothing from expensive brands the world-over). I am pretty sure that these Brooklynites who feel so conscious by shopping for their holiday gifts at By Brooklyn are still buying wines from Italy, France, California, Australia, etc because Brooklyn is not a well-known grape or wine producing region. They are probably buying international cheeses as well.

            All of this is a jumbled discussion and probably worth a post on buying local or not. In short, By Brooklyn could not and would not exist in East New York or even down by Bay Ridge/Dyker Heights.

          • I’m curious about this ‘buy local’ stuff you’re hearing. Is it resident driven or merchant driven? In other words, is it an advertising campaign to help small stores compete against the likes of Barney’s or is it a grass-roots political movement?

            Because if it’s an advertising campaign, it’s not really what we’re discussing, no matter how clever it is. There are lots of ‘buy local’ advertising campaigns; then there are towns like Portland, ME where there was a grassroots effort to ban non-local business; no new franchises, no new megacorp shops. Local, strictly defined, in law.

          • Resident driven but my point is that I think that a lot of people want the best of both worlds.

            They want to have their By local mentality while also living in a neighborhood with enough of a cache to attract a Barney’s. I am fairly certain that there is a good deal of crossover between both stores.

          • New Dealer, I’m really not certain there’s anything wrong with that, either.

            You go to most shopping-mall type places anywhere in the US, and they’re all the same stores. Downtown Burlington, VT, to Phoenix, AZ, to Seattle, WA. Megacorp dominates the marketplace. All the buy-local movement does is remind you to save some of that precious mad money for the local guy. Unless you live in a place like Portland, where the buy-local sentiment has sparked law has sparked some amazing new start-ups with an actual chance of succeeding in that marketplace where megacorp’s banned.

            I like to ‘buy local.’ But I shop global, too; you can’t grow oranges, coffee beans, or avacado in Maine. And we’ve got lobster, blueberries, and maple syrup that we’d like to share with the rest of the world.

            There’s no harm in both, in balance.

            I have friends opening up a textile factory in Brooklyn; I’m sure they’d love to be part of the buy-local movement, and sell their Brooklyn-made fabric/clothing to people in NYC. They won’t be able to produce enough of it to sell to WalMart or Target.

            And that’s the other important thing to remember; the larger the scale the retailer, the fewer suppliers able to meet their scale; megacorp retailers that end up shutting down regional retailers also eliminate markets for small to mid-sized producers; companies like Patagonia, Columbia, Carhart.

          • I… have mixed feelings about “buy local.”

            When we first moved here, I had to choose a cell phone company and my options were Verizon (the evil option), AT&T (the belated option, since I’d have been signing on to a regional carrier until the takeover was complete), and a local provider. The local provider was exactly what I like in a company: locally owned (other end of the state, but for cellular that is local), good policies (yin to Verizon’s yang), and so on.

            I went with Verizon. I have only barely forgiven myself for it. But they offered me more of what I needed than did either of the other two.

            I also bank nationally, because moving around so often it’s very helpful. It’s very, very nice to have a place that has places all across the country. Well, not all across the country because we’re moving into one of the 11 states where they have no presence. The state in question has some tough banking laws, and so most of the national banks have skipped it over. Which is an inconvenience.

            For retail… well, Walmart offers what nobody else around here does. Redstone has very, very few chains and is the worse off for it. Great Clips has regular hours, the local barber doesn’t. Predictable food, predictable inventory, predictable hours. It’s all really quite seductive.

          • Tod can speak to Portland better than I, but from my recent weekend there my impression was that the “buy local” thing there is as much an ethic as it is a law — and at times, it’s almost silly to behold. Nevertheless, the end product is pretty pleasant to experience.

            MegaCorp is present and doing business in Portland, too. Perhaps a bit less obtrusively than elsewhere (unless it’s Nike or Starbucks), but MegaCorp is most certainly there.

          • Burt, she’s taking about the other Portland.

          • Will, I still don’t understand what you have against Verizon. Verizon’s treated me quite fairly as a customer, its product (cellular coverage) is generally superior in quality to that of its competitors, and its rates are in line with its competitors.

            Yeah, the customer service sucks sometimes, but that’s true with MegaCorp generally.

          • I will be unloading and Verizon (and at least two of the other three) in a post soon.

            However, I will say this for Verizon: They put up a signal or booster at or near the rest stop in between Callie and Redstone. Before, it was that frustrating in-between where there was just enough signal to give you hope, but not enough to actually be useful. Now? It’s beautiful.

            Which, considering that we’re talking about a rest stop in between a town of 5k and a city of less than 50k, is pretty amazing when you think about it.

            So, evil though they may be, there is that.

          • “Burt, she’s taking about the other Portland.”

            Well, there’s your problem right there.

          • Tod can speak to Portland better than I

            Why, doesn’t Tod have Verizon too?

          • I bank internationally. I also have 2 credit unions. Don’t put all your eggs in one basket. Soon, it will be Caturday (which only comes after Bank Failure Friday).

        • Theory is poor. people don’t put bumper stickers on their cars that say “Drill More Oil” because they work for oil companies.

    • Still I love my Mac and I don’t see it as ever being an affordable local product.

      Not just affordable, but local at all. I hang around the edges of assorted Peak Oil (and peak fossil fuels more generally) discussions. One of the more interesting things that comes up from time to time is “localization” of production. I am always surprised by how little appreciation people have for just how much tech they would have to give up to achieve different degrees of localization. And I’m amazed by the lists of skills that people put on their list when they are planning a “self sufficient” village/town of a few hundred people. In one of my favorite examples, electrician (to wire up solar PV panels) was on the list, but nothing about growing plants for fiber, extracting the fibers, spinning thread, weaving cloth, and producing clothing. Nor a skilled carpenter to make the wooden parts of things nor a smith/machinist to make the tools for the carpenter nor… It’s astounding how quickly specialization and trade across groups of people is needed to support even low-tech stuff.

      My own guess for integrated circuits — a necessary factor in so much of today’s tech, not just your Mac and mine — is a minimum population of 30-50 million people spread over a wide range of geography.

  4. Large Megacorps have the ability to to become major players in politics and cultual life, something small business don’t have. That is, after all, why they call it corporatism (and a tax code of some thousands of pages),which is what we have vs real capitalism. Megacorps look out for their own interests (not saying that is bad) but often those interests (lower cost production, and others) are a detriment to the domestic economy.

    One of the problems touched up in the OP was the health care. Two of the wost things to come out of WW2 were tax withholding and employer paid health insurance. I’m all for a single payer system-the one where the receiver of care pays the bill.

    • oh, are we now…? half a million dollars and the patient up and dies on you? leaving you as a creditor for his estate, which is worth… $5,000? (those paying attention know exactly where I got those numbers, too!)

      • That’s what insurance is for….individual insurance. Or you can get it through various organizations you belong to..

        • Then you’re talking the insurance company paying the doctor.

        • Including your employer, who actually has an an interest in keeping you healthy and unworried about family health issues.

          • The point here is that the consumer of care is not the one paying for the care. They are not price aware. Currently, employers pays for the insurance care and the receiver of care only pays a co-pay or deductible. They have no incentive to be a smart consumer of healthcare. Take away the third paty (the company) and the reciever of care will become a whole lot more aware and sensitive to price. It will, likely, reduce costs as there is less red tape to deal with.

          • Damon,
            Look at what blaise wrote about fixing health care. The SYSTEMIC Waste comes from Insurance Companies putting roadblocks to actually paying out claims. you fix NOTHING by removing the employer, other than incentivizing stupidity (that is to say, you INCENTIVIZE people picking up plans that they “can afford”… aka no plan at all, or one that is designed to freeload off Nixon’s hospitals must treat law)

          • That is, the employer pays for some fraction of the insurance, and the employee makes a cost/benefit analysis of which plan to choose because he’s paying for the rest.

            If you get full insurance with no cost to yourself, I want to work there too.

          • If you get full insurance with no cost to yourself, I want to work there too.

            A couple of days ago my wife pointed out the list of benefits Craigslist was offering if they hired you to work for them in San Francisco. Don’t know how long it will be up, but the offer was here. They’re offering 100% of the health and dental insurance costs for the employee and dependents, and 100% of the employee’s covered out-of-pocket expenses.

          • Of course, at 30-some employees, Craigslist isn’t a megacorp. They don’t release their financials, but estimates are that their revenue runs better than a million dollars per employee annually. Facebook, with about 5,000 employees, is also in the million dollars per employee range, and appears to cover 100% of medical insurance for employees (less than that for dependents). The revenue-per-employee figure can explain a lot of things about benefits. At one point, various mergers, splits, and acquisitions had me doing my job for an “international telecommunications holding company.” The few hundred of us that were direct employees of the holding company had more generous benefits than were provided by any of the companies that we owned, in part because the large revenue-per-employee made that possible.

    • Most car dealerships qualify as “small” businesses, but as a group they probably have the most outsized influence relative to their size because each individual one is a large employer in their district. So you end up getting ridiculous stuff like “small business” car dealerships making “big business” employers like Tesla illegal.

      • I’m not talking about waste Kimsie, I’m talking about intelligent consumer behavior. In almost every other aspect of life, amercians comparison shop. They compare features, price, quality, service, etc. when selecting the best product for their consumption. This doesn’t happen in health care services (for the most part) because those paying the bill are not getting the service. The receiver of the service has no incentive to be price aware and wants “the best” and consumes more services than they would if they had to actually pay the bill. It’s similiar to if “car insurance” covered oil changes and gas.

        There is a lot of waste in the sytem and a lot of malincentives but those developed after the current healcare arrangement took place. It’s not a root cause.

        And frankly, on a side note, I see no reason why someone should be able to choose to NOT have health insurance. And no, I see no reason why society should have to “foot the bill” for someone’s care should they have choosen not to get care and then show up at the emegency room.

        • Well, Damon, if you want to lost a gobton of immigrants and other people to going to Civilized Countries, well…
          Then it’s perfectly okay to watch people die of a dental visit — that they were perfectly willing to pay for, simply because they had a previously undiagnosed side-effect (dude, they’re giving you ADRENALIN!) that caused a heart attack, which they couldn’t pay for.

          Your America and my america are different places, sir. in my America, many grocery stores are only open for about six days a month. In my America, the space between hospitals (particularly ones that aren’t owned by the same chain) is rather large. But, hey, you haven’t gotten out much, have ya?

          Insurance companies are NOTORIOUS for overpaying on Children’s Health Care. Bad PR you see.

          But hell, go right on thinking you’re right. Who actually works in the industry? That’s right, I do.

  5. Will,

    What do you make of the argument that the Internet killed the middle class?

    This was an argument on recently. The author noted that at the height of her power, Kodak employed 140,000 but is now bankrupt and gone. Meanwhile Instagram only employed 23 or so people when it was bought by facebook for a large amount of money. Same with Tumblr and Yahoo.

      • As do I.

        It takes a certain kind of utopian to think that a post-employment future is going to be paradise and I am no utopian.

        • Handling a post-employment future is going to require chaning several thousands of years of assumptions about work, survival, money, and the distribution of goods and services.

          • “This was an argument on recently. The author noted that at the height of her power, Kodak employed 140,000 but is now bankrupt and gone. Meanwhile Instagram only employed 23 or so people when it was bought by facebook for a large amount of money. ”

            except that’s a *really* silly comparison if you think about it for a minute. the only link between those two companies is that they deal with photography – kinda, sorta, almost.

  6. There’s also the case that percent of people employed in small businesses is linked to higher unemployment and corruption. The top 5 OECD countries for small business employment are Greece, Italy, Portugal, Mexico and Spain (58-38% work in firms <10 employees). On the other hand, the bottom five are the US, Germany, Denmark, NZ and the UK (11-21%).

    Also, the small businesses that create jobs aren't the small mom and pops, it's the small businesses that have visions of being big businesses. It's less about your local Subway franchise or tailor, but the tailor who isn't happy with having one shop and wants to open a chain of tailors. I think big companies are overly demonized and small companies overly romanticized. I think entrepreneurs are fantastic and I love them, but they're great because they don't romanticize being small, but rather because they have aspirations of being big.

    • Small businesses have their place but its a very specialized place, producing luxury goods and services. For larger scale goods and services, big and medium sized businesses are better. I’d also argue that many of our small businesses are very large by historical standards.

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