Economic fallacy comes in waves of fashion. One shared by left, right and many religious leaders these days is that small business is beautiful and big business is somehow ugly and wrong. Many clergy believe that big business, merely for being big, is immoral.
Of course, small can indeed be charming. But charming is not the same as “virtuous.” Big or small, the work and genius involved in making a vegetable stand profitable also makes a company like Verizon Wireless profitable, because entrepreneurs face the same major challenges. They do not know the future. They must acquire their resources before they are sold. They must pay their employees before the profits appear. And there is no certainty that the consumers of tomorrow will do the same thing that they did yesterday.
Of course, if some corporation gets large due to subsidies or protectionism or government contracts, that’s harmful and wrong. But in a market economy, there is only one means toward getting bigger: serving consumers. All big businesses started as small business, and their growth stems from doing a good job at what business is supposed to do.
Let’s say the vegetable stand was sold out by noon every day. It then has to expand inventory and tables and employees. At some point, the costs are too high to set up and take down every day. So they acquire a permanent structure. That structure gets bigger, so they set up another structure across town. Then the people from the neighboring town want the same service for themselves.
This process continues until there are 100 stores in the region, and then the charming vegetable stand suddenly gets denounced as “big business”—exploiting people, dehumanizing communities, and homogenizing the culture! Well, we have to ask the advocates of “small is beautiful” at what point in the process of growth the veggy stand owner should have stopped serving people what they want.
What’s really missing among religious advocates of the “small is beautiful” movement is an understanding of economics, one which the Acton Institute is promoting in its work, and you are supporting with your generous spirit.
Rev. Robert A. Sirico,