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SamuelRSmith on 07 May 2014
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Kasz216 said:

Call me crazy, but i'm not sure this chart actually tells us anything useful.

On it's face it looks like the economy is getting smaller?

I mean, should we expect businesses to grow forever?

Sure with population increasing we MIGHT expect businesses to keep growing, except for the fact that businesses increase as well.

I mean, Walmart has a bigger GDP then Norway.


Plus i mean look at that spread.   It's so low at  1979... despite 1979 just being an awful year for the economy.

No individual business should be able to grow forever, diseconomies of scale start to grow faster than economies of scale, causing a natural limit to the size of a business. Problem is that due to the large companies being able to offset their diseconomies of scale through cronyism and are growing way larger than businesses in a free market ever would. This is part of the point of the graph, consolidation of the economy into the hands of fewer and larger businesses, which shouldn't be happening (if number of businesses opening is falling, while businesses shutting down are rising, yet the economy is either stagnant or growing, you have consilidation).