Big business vs. small business...filthy rich vs. well off

[SpicyMcVoodoo]

Am I the only one here who draws a HUGE distinction between big business and small business?

Basically, I'm a huge believer that capitalism is an excellent driver of innovation at the small level. In other words, innovation comes from the little guy trying to do better what the huge corporations do. The problem with big business is that they have so much money for marketing, name recognition, and pricing edge due to economies of scale that they have a huge advantage, regardless of whether or not they're truly innovating in the spirit of capitalism.

Little business, on the other hand, either innovates or dies quickly. For this reason, via taxes and other regulations, I think little business should be given every break in the world. The little guy who risks everything to form a business needs every help that he can get.

But it seems that in mainstream politics, it's either you're pro business or against business, with no distinction between huge corporations and Joe Schmoe's start up. And on that same note, there seems to be no distinction between increasing taxes on people that make 50 million a year vs those who makes 200K a year.

One of the most frustrating things I find about American politics is not distinguishing between these two things. Discuss.

[6SpeedTA95]

Wow, excellent post.

I personally am for zero taxes on all businesses. Small and large. But more to your point you make some good points. In many cases the small businesses are on the cutting edge and in many cases are driving innovation forward. The more incentives the government takes away in the form of higher taxes or increased liability the less people will bbe willing to take necessary risks to drive our economy forward. It is this innovation afterall that fuels our economy over the long run.

One point I will disagree on, or perhaps I just misunderstood you...but this notion that big business does not fuel innovation is just flat wrong. In fact we're seeing an increasing trend in big businesses encouraging the very innovation and entreprenual activities you're speaking of. There is a difference between large and small businesses no doubt about it, and we need both for a vibrant and stable economy.

[DosEquis]

I think big business innovation is more along the lines of efficiency rather than the actual product. I don't mean to imply they do not innovate in regards to the actual product but most of their innovation (i think) is with cranking out as many units as fast as possible, while trying to maintain a certain level of quality.

[SpicyMcVoodoo]

Originally Posted by 6SpeedTA95

One point I will disagree on, or perhaps I just misunderstood you...but this notion that big business does not fuel innovation is just flat wrong. In fact we're seeing an increasing trend in big businesses encouraging the very innovation and entreprenual activities you're speaking of. There is a difference between large and small businesses no doubt about it, and we need both for a vibrant and stable economy.

All I mean is that big business doesn't have to try as hard to innovate as small business in order to survive. For example, Johnson and Johnson can keep selling Neosporin and Band-Aids without doing anything novel and keep the profits churning. These brands are permanently embedded into the consumer psyche and they generate profits on autopilot.

In contrast, if I open a business tomorrow, I better do something new an truly innovative, otherwise I'll certainly go out of business in short order...I have no status quo to depend on. And even if I do have something truly innovative, I'll have to fight to get my innovative product on the shelf because stores know Band Aids sell, whereas my innovative product is risky and may waste shelf space...and if I come out with something innovative, Johnson and Johnson could copy it and do it at a fraction of the price because of their billion dollar, state of the art infrastructure and economies of scale. No matter how you cut it, the deck is stacked against small business, although it's small business that drives innovation.

That isn't to say that big business doesn't innovate. They do because they have the same profit motive as everyone else. But innovation is the cherry on top for big business, whereas it's a matter of survival to small business.

Just look at what happened with the internet over the past 10 or so years. Almost all of the innovation has come from unheard of companies. Why? Because of the unique qualities of the internet when it first surfaced, there weren't the usual barriers to entry that other businesses face. Hence, we saw the true innovative power of small business.

What if the same thing were true brick and mortar businesses? Who knows what innovations we'd see. But the truth is that we'll never know because big business has become so efficient at driving away new brick and mortar compeition that any inkling of a promising start up is usually dissuaded or killed.