Atlantic Charges that Big Business is Killing Innovation


Picture Credit: The Atlantic, October 2016

It’s interesting to see The Atlantic criticize big business for failing to innovate. The article cites low new business formation and the lack of dynamism in the U.S. economy as key symptoms for our economic stagnation.

Botanists define a rheophyte as an aquatic plant that thrives in swift-moving water. Coming from the Greek word rhéos, meaning a flow or stream, the term describes plants with wide roots and flexible stalks, well adapted to strong currents rather than a pond’s or pasture’s stillness. For most of the 20th century, U.S. lawmakers worked to maintain just these sorts of conditions for the U.S. economy—a dynamic system, briskly flowing, that forced firms to adapt to the unpredictable currents of the free market or be washed away. In the past few decades, however, the economy has come to resemble something more like a stagnant pool. Entrepreneurship, as measured by the rate of new-business formation, has declined in each decade since the 1970s, and adults under 35 (a k a Millennials) are on track to be the least entrepreneurial generation on record. This decline in dynamism has coincided with the rise of extraordinarily large and profitable firms that look discomfortingly like the monopolies and oligopolies of the 19th century.

In fact, investment bankers have been busy inking deals to merge big firms together without any fear of regulatory intervention. And highly valued internet firms like Google and Amazon such up AI players and other social media firms with barely a stop at their stock share printing press. Derek Thomson argues that,”antitrust law shifted over the course of the 20th century from principally protecting competition to principally protecting consumers. Today many reformers are calling for the pendulum to swing back.”

Frankly, the disturbing stories of corruption and deceit at big banks makes one wonder why the Federal Reserve continues to pile on the national debt to nearly $20 Trillion. Look at the CEO of Deutsche Bank featured in a Zero Hedge article which has benefited from the largess of the European Central Bank.


Picture Credit: Deutsche Bank’s CEO John Cryan praying

Zero Hedge points out the extensive market manipulation behind the story, “Following the seemingly endless procession of short-squeeze-fueling trial balloons last week – from settlement rumors to German blue-chip bailouts to Qatari investorsGermany’s Bild newspaper confirms the rumors that sparked weakness on Friday: Deutsche bank CEO John Cryan has failed to reach an agreement with the US Justice Department. His arsenal of strawmen include: denials of bailouts, blaming speculators, rumors of informal capital raising talks with Wall Street firms, rumors of capital injections from Germany’s blue-chip corporations, rumors (denied) of Qatari sovereign wealth fund investments, and the sale of key assets and elimination of thousands of jobs.

The Atlantic laments there is an issue with Bigness overall.

The technology sector presents a thorny problem for antitrust reformers. Between too-big-to-fail banks and seemingly incompetent cable companies, there may be popular support for action against consolidated market power. But many of the companies in Warren’s crosshairs are beloved. The three most admired American companies are Apple, Alphabet, and Amazon, according to Fortune; Facebook is in the top 15 and rising fast. Our attention seems to be ever more focused on our phones, and Apple owns 40 percent of the U.S. smartphone market; between them, Google and Facebook collect more than half of all mobile-display advertising revenues. If mobile phones, software, and social networks eat the world, who decides how big the portions can be?

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