Facebook is so large that even a highly inventive and well-financed competitor, like Snap, is hardly able to compete in social media.
Home Depot and Lowe’s are so large that local hardware stores across America, that have been in business for 80 years, have had to close their respective doors.
Amazon is so powerful, that brick and mortar retailers, and small e-commerce retailers, are in constant battles for their industrial lives, or have died.
TJMaxx and Ross Stores have such buying power, due to scale, that the idea of small off-price stores has all but vanished from the face of America.
As companies get larger and larger, small businesses, in almost every industry, will find it nearly impossible to compete on any price or service level.
That which is seeing inflation in this country and that is damaging to the American economy is the size of businesses. They depress price competition, and they depress wage competition. They purchase with such scale that smaller companies can not compete on price. They market with such muscle that smaller companies are overlooked online.
The Internet has created a scenario where scale is king. Of course, scale- and pricing power- has always been king. But, with e-commerce, service and relationships have become devalued, and geography has become irrelevant, such that “price” is all that matters anymore. And price is all about size. Volume gets the best price.
This is why wages are, forever, practically stagnant. The largest companies, like Amazon, don’t need to compete on price (in fact, a company like Amazon is so large, it often just takes a loss on price, altogether, so that it can enter a market and own it). So they can grow, and wipe out competitors, and hire their former employees without paying higher wages.
Employers are gaining more and more of the market power in employer-employee relationships. Small businesses that sell everyday-needed products can no longer survive. In fact, they must sell the most unique and patented products in order to survive; and, even then, it’s hard to get distribution, except through ones own website (which is o.k.). But even online marketing costs are rising due to large companies’ needs and demands for advertising, such that a small business can hardly launch without a costly SEO expert. Moreover, inventing and selling products, even online, will be too expensive in the future. Too much video and data will be being consumed, and TV and the Internet will be synonymous. It will be hard to get seen or heard. Further, the most common products will be sold by the largest companies at the lowest prices, and the most unique products will have to be very technological and or scientific and will be expensive to develop and manufacture or market and sell. Small businesses will be excluded from the invention-to-sales process.
America used to be about working hard- no matter your intelligence or education level- and “making it”, if not throughout the world, then at least in your own community. Now, you need a patented product “and” great technology skills to be an entrepreneur- rather than honesty, determination, relationships, and hard work. Success “only” in your own community is nearly impossible. You are either able to compete worldwide, or you will fail (save, perhaps, for local services like a plumber, or hairdresser, or dog walker). Even lawyers, accountants, and doctors need skills and services that go beyond the local level, as any competitor can be found online and traveled to- or consulted by phone and email. In the case of medical services, these are also going “corporate” such that national brands will “out-price” and “out-market” local providers not part of a national network.
Distribution and sales at all levels is all about “scale”. As there are less and less distribution outlets (i.e. stores), and as price and cost-control is more and more important to surviving companies, only the largest manufacturers, suppliers, and wholesalers that have great scale will have retail customers. Consolidation brings scale and the need for scale brings consolidation. Flat wages, and the need for manufacturers (and retailers ) to achieve volume in place of margin, brings the need for scale to keep prices low and to get and maintain shrinking volume of retail shelf space.
Online business review sites enhance this inflation trend. Large companies can easily weather online negativity towards their stores, brands, and products. Small businesses can not as easily overcome such feedback. Thus, people who need local jobs are actually destroying their own job prospects and their own local communities by attacking their own local businesses- forcing them out, and making room for large companies to inflate and get even bigger, as small businesses fail, due to this phenomenon- hurting everyone in their respective community who loses the local place to shop, the local level of service, and the local job opportunity at a potentially higher wage and better quality of life than working in a big box store or distribution center located miles and miles away.
And there is no reaction or response or policy available to the Fed to deal with this sort of inflation. This requires a combination of a legislative response, and a tax response, and a social reversion and reversal and rejection of what is happening.
And this all goes for business-to-business sales as well. For companies that sell to other companies, it is also all about scale and price- rather than relationships. It used to be that a salesman knocked on a factory door with a product to sell. It would often be hard for a business customer to evaluate many products quickly, so relationships mattered. Now, even businesses can use the Internet to timely find a better component or lower priced input-product.
If, and when, the economy slows or goes into recession, this inflation will be exacerbated. Following the 2007 housing crisis and ensuing financial crisis, Amazon and TJMaxx grew by leaps and bounds, as consumers became more price sensitive. The power of scale prevails and thrives under such a circumstance.
What does this all mean for society? It means that small business will be overcome by large companies in every area of industry and life. It means that entrepreneurship will be mostly about being able to sell an idea to a large company. It means that corporate America will control our politics and our society. It means that customer service will continue to decline. It means that our society will become less capitalist and more socialist, as we maintain low unemployment by working for large companies at weak wages- rather than try to compete on our own against corporate behemoths. It means that companies will be empowered to pay the lowest legal wage, as the number of employers will be finite and competition for labor will be limited. It means that technology will replace people. It means that the soul of America is disappearing. And it means that real relationships matter less, and real people will matter less. But we’ve all used Facebook … so we already know that.
Neil S. Siskind, Esq., President
The Siskind Law Firm
Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Learn more at: http://www.neil-siskind-the-fatherhood-assignment.org/
Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
The Neil S. Siskind Nature Preserve is over 7 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.
Neil Siskind, Founder, “National Fatherhood Day” – March 29th
Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
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You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.
Neil Siskind’s Volunteer Work:
– Memorial Sloan Kettering Cancer Center, Volunteer
– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskindhelp children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal
– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm
– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving
– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/
Neil Siskind’s Pro Bono Work:
– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com
– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/
– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/
– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.
Neil Siskind’s Government Work:
– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern
Neil Siskind’s Community Assistance:
Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.
Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/
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