By Robert D. Atkinson and Michael Lind
Why small business is not the basis of American prosperity, not the foundation of American democracy, and not the champion of job creation.
In this provocative book, Robert Atkinson and Michael Lind argue that small business is not, as is widely claimed, the basis of American prosperity. Small business is not responsible for most of the country's job creation and innovation. American democracy does not depend on the existence of brave bands of self-employed citizens. Small businesses are not systematically discriminated against by government policy makers.
Rather, Atkinson and Lind argue in Big Is Beautiful, small businesses are not the font of jobs, because most small businesses fail. The only kind of small firm that contributes to technological innovation is the technological start-up, and its success depends on scaling up. The idea that self-employed citizens are the foundation of democracy is a relic of Jeffersonian dreams of an agrarian society. And governments, motivated by a confused mix of populist and free market ideology, in fact go out of their way to promote small business. Every modern president has sung the praises of small business, and every modern president, according to Atkinson and Lind, has been wrong.
Pointing to the advantages of scale for job creation, productivity, innovation, and virtually all other economic benefits, Atkinson and Lind argue for a “size neutral” policy approach both in the United States and around the world that would encourage growth rather than enshrine an anachronism. If we overthrow the “small is beautiful” ideology, we will be able to recognize large firms as the engines of progress and prosperity that they are.
Corbin Barthold on Forbes wrote:
"In the view of Robert D. Atkinson and Michael Lind, the authors of Big Is Beautiful: Debunking the Myth of Small Business, America’s predisposition since the 1970s for favoring the little guy is not just misguided but has had a profoundly pernicious effect on our economy and society. The empirical evidence amassed by Mr. Atkinson and Mr. Lind in opposition to the 'cult of small business in America' is impressive. [...] Regardless of the validity of their specific policy prescriptions, the data synthesized by Mr. Atkinson and Mr. Lind does call into question the wisdom of prevailing attitudes toward small business relative to large not just in law but in society. [...] Large corporations themselves, as the recent Facebook scandals attest, bear much of the blame for the increasing disfavor in which they are held. But even if some of the contempt has been earned, Big Is Beautiful succeeds in highlighting why it is in our collective interest to find ways to help the biggest corporations earn back our trust, and attract more of our best graduates."
Andrew Hill on The Financial Times wrote:
"Although they offer much history and many case studies—e.g., India—Atkinson and Lind focus above all on data. And the data, they find, is lopsided. Big firms are much more productive than small ones. They pay employees more. They provide more training, more leave, and more medical and retirement benefits. They are more stable. They are more diverse. They export more. They donate more. How does a business get big? Almost always through ingenuity and efficiency, Atkinson and Lind contend. [...] If big business is good, big antitrust is bad. And so it is. Atkinson and Lind discuss some of the many mistakes made by our antitrust officials, who often do little more than discourage enterprise and drive industries overseas. [...] The planet’s billion cows are releasing a lot of methane, but Tyson Foods is helping to create artificial meat. Global carbon emissions are higher than ever, but Exxon is working on carbon capture. The most dynamic companies—the biggest companies—can fund, develop, and commercialize the most revolutionary green products. If we’re going to do more and more with less and less, we have to keep scaling up."
Christine Bader on Current Affairs wrote:
"Atkinson and Lind’s statistics are wielded for political ends. They make the case that US policymakers have over recent decades shown an unjustified bias towards supporting smaller businesses. They date the change to the 1970s, when radical economist EF Schumacher wrote the influential Small is Beautiful, questioning the way the economic system depleted global resources and dehumanised workplaces. But 'megalophobia' is counter-productive, they claim. They argue instead for a size-neutral approach to supporting a full range of businesses, big and small. [...] But there may never have been a better time to work for a big company. In their efforts to survive, and recruit and retain young staff, the best large employers are being forced to adapt. They are offering employees more independence, more purposeful work, the liberty to invent and innovate, and flexible working hours and spaces: in other words, they are striving to offer the best of both big and small. In this respect, multinationals and other big groups are living up to the ambitions one prescient thinker of the last century laid out for them. He wrote that the ideal large organisation should 'consist of many semi-autonomous units [each of which] will have a large amount of freedom, to give the greatest possible chance to creativity and entrepreneurship'. That was EF Schumacher, pointing out how small could be beautiful, even within big business."
Ryan A. Decker on Business Economics wrote:
"All along the way, Lind and Atkinson point out the flaws in the anti-big movements over the years using productivity and growth data. They show that the various forms of our megalophobia have been based on elitist self-interest, naïve nostalgia, and a couple of flimsy ‘-isms’, like producer republicanism (the notion that democracy is healthier if dominated by self-employed small producers) and market fundamentalism (the belief that monolopies and oligopolies distort the market and hurt consumers). Their case is compelling—if productivity is your only God. Productivity monotheism might be fine for economists and the policy makers who love them, but a single-minded focus on how much companies produce per employee can have devastating effects on individuals, communities, societies, and our planet. [...] But never mind all of these efforts to make corporate life livable. Personal satisfaction is not on Lind’s and Atkinson’s radar. They dismiss 'Ashley’s and Justin’s' desire to launch a pizza parlor and other start-up efforts 'merely so that the owner can fulfill personal lifestyle goals,' and present, with something approaching disbelief, studies showing that 'the lion’s share of people who start businesses do so not because they want to be a rich entrepreneur, something that takes enormous dedication and hard work to achieve; rather, most don’t want to work for a boss… Another study found that 50 percent of small business owners did not start their business principally to make money.' To Lind and Atkinson, such non-economic motivators are anathema. [...] According to Lind and Atkinson, the only aim of someone starting a new business should be to scale and/or get bought out by a big company. [...] One of Lind’s and Atkinson’s central arguments is that big companies’ efficiency leads to lower prices for consumers, which increases consumption—which is all good in their eyes, even though our current rate of consumption is destructive to our health and that of the planet. [...] But don’t fret about potential harm, say Lind and Atkinson. Big companies have more resources to comply with laws and regulations, and they invest more in sustainability and philanthropy than small firms. Big firms do indeed make such investments—often to clean up their own messes. [...] Lind and Atkinson believe that government policies should be size-neutral, that we should stop discriminating against big business and let it continue to work its magic and make the world a better (more productive) place. They give a nod to the “serious challenges” that big business can present to democracies but advocate for, for example, a more lenient view of mergers, suggesting that market power and short-term price increases may not be bad if—you guessed it—productivity and GDP benefit.
But the invisible hand is blind to externalities."
"The key underlying limitation of the book is it does not take seriously firm heterogeneity and dynamics. The authors’ recommended policies assume there is a single 'national interest' coinciding with the fate of large incumbent firms and unifying workers and regions (p. 246). They quote Charles Wilson, 'what was good for the country was good for General Motors and vice versa' (p.10), but this has probably never been true. Even large firms have competitors and potential competitors, and they have customers and suppliers whose interests differ in some dimensions. Policies that support a handful of large firms and their workers unavoidably disadvantage other firms and workers, including firms that have yet to enter.
Big is Beautiful is a useful popular press corrective for the common view that small businesses generally are the engines of job growth and innovation. But much of the authors’ argumentation is one-sided and pushes the boundaries of consistency. And they avoid serious, empirically disciplined consideration of new businesses, a handful of which are critical to growth. In this respect, the authors may be lowering the status of small businesses at
the risk of giving incumbents protection from high-quality entrant competitors. Atkinson and Lind will persuade readers small business subsidies require reevaluation—a valuable contribution to the 'small versus large' policy debate—but I wish they had grappled with the more difficult
policy dilemma: small versus large versus young."
A Discussion with Atkinson & Lind about the Book
Op-eds Related to Big Is Beautiful
- “Big Business Is Not the Enemy of the People,” by Robert D, Atkinson, National Review, October 10, 2019.
- “Debunking the Myth of Small Business Job Creation," by Robert D. Atkinson and Michael Lind, The MIT Press Reader, May 30, 2019.
- “National Developmentalism: From Forgotten Tradition to New Consensus," by Robert D. Atkinson and Michael Lind, American Affairs, May 20, 2019.
- “Airline Monopoly Fears Are Bunk," by Robert D. Atkinson, Arc Digital, February 14, 2019.
- “Don’t Believe the ‘Monopoly’ Hype," by Robert D. Atkinson, The Hill, December 1, 2018.
- “Progressives’ War on Big Business Hurts Workers,” by Robert D. Atkinson and Michael Lind, Bloomberg, October 10, 2018.
- “The Number of New Startups Is Down—and That’s OK,” by Robert D. Atkinson and Michael Lind, Entrepreneur, July 25, 2018.
- “Be Grateful for Big Tech,” by Robert D. Atkinson, RealClearPolicy, June 6, 2018.
- “The Myth of the Roosevelt ‘Trustbusters’,” by Robert D. Atkinson and Michael Lind, The New Republic, May 4, 2018.
- “Why Not Declare National Big Business Week?” by Robert D. Atkinson, Inside Sources, May 1, 2018.
- “The War on Big Retail Is Nothing New,” by Robert D. Atkinson and Michael Lind, National Review, April 20, 2018.
- “Thinking Small Misses the Bigger Productivity Picture,” by Robert D. Atkinson, The Telegraph, April 12, 2018.
- “Stop Propping Up Small Business,” by Robert D. Atkinson and Michael Lind, The Wall Street Journal, April 6, 2018.
- “Is Big Business Really That Bad?” by Robert D. Atkinson and Michael Lind, The Atlantic, April 2018.
- “Who Wins After U.S. Antitrust Regulators Attack? China,” by Robert D. Atkinson and Michael Lind, Fortune, March 29, 2018.
- “Progressives Should Think Twice Before Demonizing Big Business,” by Robert D. Atkinson, The Hill, November 12, 2017.
- “The Neo-Brandeisian Attack on Big Business,” by Robert D. Atkinson and Michael Lind, National Review, October 2, 2017.
Interviews & Discussions on the Book
- “Big is Beautiful: Debunking the Myth of Small Business,” interview by Daniel Peris, New Books Network, July 19, 2019.
- “Is It Time To Break Up Big Tech?” interview by Fareed Zakaria, CNN's GPS, May 14, 2019.
- “Why the Small Business Administration Should Make Startups a Priority,” interview by Leigh Buchanan, Inc. Magazine, April 2, 2019.
- “The Case for Big Business,” interview by Mene Ukueberuwa, The Wall Street Journal, March 22, 2019.
- “Knowledge@Wharton,” (audio) interview by Dan Loney, Wharton Business Radio, March 5, 2019.
- “Episode 15: Chain Stores,” interview by Jason Feifer, Pessimists Archive Podcast, February 8, 2019.
- “Big Business Fights Back in the Battle for Millennial Talent,” by Andrew Hill, Financial Times, September 10, 2018.
- “Startups are Declining: Is It Good or Bad?” discussion with Robert D. Atkinson on WGN Radio, September 1, 2018.
- “The Benefits Of Big Business,” discussion with Robert D. Atkinson on WGHB’s Innovation Hub, July 13, 2018.
- “Should the U.S. Break Up Amazon?,” interview by Derek Thompson, The Atlantic's Crazy/Genius podcast, May 17, 2018.
- “Are Small Businesses Really the Backbone of the Economy?” by Liz Farmer, Governing, April 20, 2018.
- “The Case for Big Business in America,” conversation with Robert D. Atkinson, by Lydia DePillis, CNNMoney, April 7, 2018.
- “The Role of Big Business,” discussion with Robert D. Atkinson on C-SPAN’s Washington Journal, April 6, 2018.
- “Rob Atkinson on Small and Big Business,” interview by Carol Massar, Bloomberg Radio, April 6, 2018.
Table of Contents of Big Is Beautiful
Part I: History and Present Trends
- Belittled: How Small Became Beautiful
- Why Business Got Big: A Brief History
- Understanding US Firm Size and Dynamics
Part II: The Advantages of Size
- The Bigger the Better: The Economics of Firm Size
- Small Business Job Creation: Myth Versus Reality
- The Myth of the Genius in the Garage: Big Innovation
- Small Business in a Big World
Part III: Politics and Policy
- A Republic, If You Can Keep It: Big Business and Democracy
- The Strange Career of Antitrust
- Brandeis Is Back: The Fall and Rise of the Antimonopoly Tradition
- Has Big Business Gotten Too Big?
- Small Business Cronyism: Policies Favoring Small Business
- Living with Giants
About Robert D. Atkinson & Michael Lind
Robert Atkinson is Founder and President of the Information Technology and Innovation Foundation, a Washington, D.C. think tank, and coauthor of Innovation Economics: The Race for Global Advantage.
Michael Lind is a Visiting Professor at the Lyndon B. Johnson School of Public Affairs of the University of Texas and author of Land of Promise: An Economic History of the United States.