To the editor,
Like the law of gravity, the “Law of Diminishing Returns” is a universal law. This law is a natural phenomenon that facilitates the balance of nature. It attests to the fact that in getting big and bigger there is a point where profits start to diminish. This is brought about in that the bigger you are, the slower you are able to make decisions in a changing environment. There is more indecision, jealousy, infighting, cronyism, self-gratification, favoritism, etc. In a competitive environment a smaller specialized business can take better advantage of new technology and in assessing and taking advantage of economic changes. This prevents the bigger businesses from raising their prices in order to overcome their inefficiencies. This is why the big businesses seek government-sanctioned preferences in taxes, regulation, handouts and protection.
All this is done to make it harder for small businesses to grow and compete with them. I would say that a good 95 percent of the laws now on the books are put there in order to make it hard or impossible for the smaller businesses to start, grow, and compete and check the growth of giant businesses. It is a fallacy to say a business is too big to fail. Its failure is natural in a free market and under the “Law of Diminishing Returns.” The assets of a giant business failing do not disappear. They are simply purchased by smaller more profitable businesses. When giant businesses fail it is to the consumers’ benefit in that it breaks up their monopoly status and reintroduces competition. Wouldn’t it be wonderful if we had 100 competing oil companies instead of three or four?
Clarence Jaeger
River Oaks Dr. |
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