Big Business and the Death of Mom and Pop Shops

It's like over-fishing. If we all agreed to fish less, fish populations wouldn't be dwindling, and we'd all be better off.

But no individual has any incentive to fish less.

If I go out in my boat, I am not personally going to make any significant difference in the fish population, so I ought to just fish as much as I can. However, that doesn't mean I don't think it's worth it to preserve the fish population. It's just that my individual action doesn't matter. What needs to happen, for everyone's benefit, is that all parties involved make a collective agreement.

It's the same with the mom and pop shops. I would much much much rather live in a world dominated by small businesses, but I can't save the small stores by my individual action. I'm only hurting myself.

Government action is needed, and not just because mom and pop stores are charming or whatever. In a world dominated by big business, innovation is discouraged, and slavery is created. That sounds pretty strong, so let me explain: Big businesses make it so 95 percent of the population has almost zero chance of ever being able to work for themselves, or even make a decent wage, no matter their talent or abilities.

Let's say Jeff is from a poor family, but is especially talented. He creates a way to make the best tasting tasting in the world without having to use any special or overly expensive ingredients. So he decides to try to start a business using that talent.

In order to start his business, Jeff needs start-up cash. He has to find someone who will get him a loan. Imagine you're a bank, and some random nobody with no collateral asks for a meeting and tells you his coffee is the best and he wants to start a business. Yep, it goes just like you imagine.

But let's assume Jeff gets lucky and gets a loan. He starts his business and finds that even though he uses the same ingredients, the same equipment, and the same materials as Starbucks, he pays a lot more for it than Starbucks does.

Why?

Becasue Starbucks is huge. They buy in bulk and push suppliers around. For this reason, even though Jeff's business is every bit as efficient as Starbucks, his coffee costs a dollar more per cup, making it difficult to compete.

The same thing happens in any business. The very fact that the business is big makes it a better competitor. This means that anyone who wants to start their own business is at a disadvantage, regardless of their intelligence or ability. So, Jeff is probably out of luck.

But, continuing the story, let's assume enough people are willing to overlook his higher cost, and Jeff's coffee shop starts taking business away from the local Starbucks. Even with added costs, people prefer Jeff's coffee and are willing to pay for it.

Well, Starbucks has billions of dollars. They don't need all their stores to be profitable, so they can use those billions of dollars to have promotions in that town, just to crush Jeff. They can make it so someone sees a Starbucks advertisement on every other billboard. If Jeff's coffee is really the best in the world, they can just build a new store right next to Jeff's store, so everyone who would buy Jeff's product passes Starbucks first. This kills Jeff. Even though he ran his business better, the very fact that his bank account was smaller means that he can't be successful. Starbucks gets to retain a near monopoly, just because they started off with more money.

You might say that all or at least some of this is a good thing. After all, if Starbucks's bargaining power lets them sell coffee cheaper, isn't that a good thing? Maybe all the people who want to have a coffee shop are out of luck, but the rest of us save some money, so it's alright.

Well, that works until you realize the same kind of thing happens across almost any industry. So you save a few cents on bread, on muffins, on electronics, on coffee, on clothes, on entertainment, on everything.

The flip side is that you're unable to be self-employed. So even though "efficiency" has saved you a few bucks, the vast majority of the money saved turns into profits for the super rich while you, and 95 percent of the country, have lost so much income that the benefits don't come close to outweighing your losses. That's how we got in the situation where the average worker produces five times as much, but makes the same as they did fifty years ago.

This also lowers the wages for everyone, even people who don't own their own businesses. In a world like ours, dominated by titans and chains, no one can say "Business X, I don't like that you keep the vast majority of your profits and pay your workers shit. I'm going to start my own business and compete with you. Instead of four yachts, I'll only have one, but my employees will be happier and healthier, and all your best employees are going to come to me, so I'll be more competitive".

In theory, this is how things should work. But, as mentioned above, the size and bankroll of business X means that the little guy can't try that. If he wants to eat, he will have to become a wage slave and let some one else take 90 percent of the value created by his work. His abilities don't matter and his talents won't matter. The lion's share of all the value he creates will go to the person who happened to start with the most money, just because that person started with more money.

Now, I'm all for unbridled capitalism IF everyone starts on an even playing field. For the first generation, capitalism is great. After that, it's slavery.

It takes a truckload of money to start even a small business, about 2-3 years' full-time salary as a bare minimum. It's out of reach of the vast majority of people. It's mostly people with personal connections or wealthy relatives that manage to start businesses. The true rags to riches are really rare. They exist, but they're a fraction of a fraction. Most successful business owners started with a lot of help from people close to them.

Try to $50,000 - 75,000 with the understanding that this would be barely enough to start a business. It's an uphill battle with a steep incline.

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