IN 1996, in one of his most celebrated phrases, Bill Clinton declared that “the era of big government is over”. He might have added that the era of big companies was over, too. The organisation that defined capitalism for much of the 20th century was then in retreat, attacked by corporate raiders, harassed by shareholders and outfoxed by entrepreneurs.

Great names such as Pan Am had disappeared. Others had survived only by dint of huge bloodletting: IBM sacked 122,000 people, a quarter of its workforce, between 1990 and 1995. Everyone agreed that the future lay with entrepreneurial start-ups such as Yahoo!—which in late 1998 had the same market capitalisation with 637 employees as Boeing with 230,000. The share of GDP produced by big industrial companies fell by half between 1974 and 1998, from 36% to 17%.

Today the balance of advantage may be shifting again. To a degree, the financial crisis is responsible. It has devastated the venture-capital market, the lifeblood of many young firms. Governments have been rescuing companies they consider too big to fail, such as Citigroup and General Motors. Recession is squeezing out smaller and less well-connected firms. But there are other reasons too, which are giving big companies a self-confidence they have not displayed for decades.

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Filed under: * Economics, Politics • Economy • Corporations/Corporate Life

1. tgs wrote: It is perfectly ridiculous that the first big investment by GM after being bailed out by the American taxpayer is to invest $293,000,000.00 in a plant in China. That plant should be built in America to create American jobs and to spur the US economy. If they want to invest in China let them pay the money back and get money from somewhere else to invest over there. August 30, 5:59 pm | [comment link]

2. Branford wrote: But, tgs, why should they? There were few strings on the money - if Congress was so interested in “creating” jobs, they would have made that stipulation - but they weren’t - only in appearing to do something. August 30, 7:03 pm | [comment link]

3. libraryjim wrote: Unfortunately, if GM built a plant in the States, there would be the chance of huge corporate taxes.  Ditto for any other corp that wanted to expand. August 30, 7:29 pm | [comment link]

4. BlueOntario wrote: “the chance of huge corporate taxes” Versus kickbacks and bribes somewhere else? August 30, 11:01 pm | [comment link]

5. tgs wrote: I agree with #2,3 & 4 which is why we should all contact our Representatives and vigorously protest the spending of taxpayer monies by GM in China and insist that they begin immediately to do away with our higher corporate taxes and other impediments to industrial growth they, the Congress, have put in place in the US. I’ve contacted my Representatives on this, have you? August 31, 8:09 am | [comment link]

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