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Local view: Business: Does size matter?

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opinion Duluth, 55802

Duluth Minnesota 424 W. First St. 55802

Too big to fail.

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Economies/efficiencies of scale.

Big-box stores.

Massive mergers.

In how many different ways are we American consumers assaulted by size? And what is the payoff? Or would “tradeoff” be a more meaningful term?

Certainly many goods can be delivered cheaply, the primary appeal to both business and consumer. Yet I and people I talk with and observe have questions with this premise. Customer service has become oxymoronic: Getting help or questions answered is far too difficult. The customer is not always right — but the customer is always important. That’s something too many big businesses seem to resist. Moreover, have they not learned a customer who complains is really your best friend? Check your buying experiences at a locally owned business versus a remotely owned retailer. Which was more pleasant and productive?

Who are the biggest offenders? Big banks, gas stations, and airlines top my list: Nickel-and-dime charges by billion-dollar behemoths. What’s going on? Whatever happened to competition that once upon a time provided a self-regulating mechanism? When one company got too large or gained too much market share, a competitor or competitors would emerge with a lower price or a better “mousetrap.”

Let’s consider gas prices. The big player(s) set the price. If someone tries to lower the price, the big guys ratchet down their price until the little guy is forced out. So much for competition.

Then there are banks, previously the premier local lender and jump-starter of businesses and mortgages. Try to get a loan now and then have the bank stay on the risk. Generally mortgages and such are sold off to larger units, which then have no direct skin in the game. All in the name of efficiency? Isn’t this what led to the Great Recession of 2008, from which many folks are still trying to recover?

Wasn’t there something about anti-trust and monopolies that I recall from basic economics courses? Between government regulation and private-sector competition, consumer efficiencies and choices would and should prevail.

In defense of business, “profit” is not a dirty word. It’s what drives business; it’s risk vs. reward; it’s fundamental: paying employee salaries and taxes. We all benefit by having varied products to purchase ostensibly in an open market.

In defense of the consumer, government oversight and regulations should hold such practices accountable, punish abuses but not thwart or strangle the basic laws of supply and demand.

What am I missing in this overview? Could it be as simple as the law of diminishing returns? Undoubtedly things are more complicated, yet ignorance here is truly not bliss. Note that I recently returned from France where “it’s complicated” was used excessively by the French to attempt to explain their frequent strikes, traffic and other maladies without offering solutions.

So in business, does size matter? Is it a good thing? Stay tuned.

Tom Wheeler is a longtime Duluth-area businessman, civic leader, philanthropist and regular contributor to the News Tribune Opinion page.

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