And among economists, the evidence keeps building that the concentration of major industries among a handful of superstar firms might be connected to deep economic dysfunctions. When there are fewer employers in an industry, for example, they have more power to depress workers’ wages. Big dominant companies might focus more on defending what they have than on generating the kinds of innovations that drive economy-wide productivity growth. And the rise of superstar firms is likely related to the rise of superstar cities and the hollowing out of many local economies.
This is important and persuasive work—much of which I’ve written about in my day job as an economics writer at The New York Times. But in all the piling on, I fear something really important is missing from the conversation. The rise of superstar firms is rooted in fundamental technological and economic shifts that are mostly desirable. And policy changes aimed at limiting the downsides of corporate concentration—an important goal—wouldn’t restore an economy built on local, artisanal companies. They would instead leave us with a slightly larger variety of very big, technologically advanced companies dominating the corporate landscape.
I’m broadly supportive of using public policy to address market power and industry concentration, but within the political sphere calls for those policies seem, in my view, to ignore the point that Irwin makes above.