SamuelRSmith said:
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). |
I have a question though. Are we taking into account the new wave of business? I'm talking about the ebayers and the youtube celebs and the painters and such. Do we accurately know how many people sell things without reporting it? About a dozen of my friends do a variety of things from private tattooing, to furniture building, to selling paintings yet don't report themselves as self employed or owning a business. Who would blame them? Why would anyone want to report selling a 4000 dollar painting to the government? We live in a different world now. People make money in different ways. China, offshore manufacturing, and corporations have taken over the small businesses that provided goods, and we have become something of a service/media economy.
For example, me and this chick I know were shopping the other day, and ran across some boots. Cowboy boots to be exact. But have you seen the prices on them? They're not exactly cheap. But does anyone go into walmart and buy cheap cowboy boots? Sure, I bet some do, but probably out of necessity. What's really desirable in that market is hand-made all american authentic boots by an independent brand. We are paying for the work, not the product. Sure, we no longer make enough margin on the leather that goes into the boots. But we have something better. The American brand.
Now, you mentioned earlier something about blackmarket booming. I would agree with that. One of the main problems with a service economy is that there is no real paper trail. How would the government know if I mowed someone's lawn? They would certainly be able to track inventories, but as far as services, they can't track it. If the government wants things to be reported properly, they need to incentivize entrepreneurs to officially become businesses and give them a reason to choose to pay taxes on their earnings.
