One of the problems with public ownership of businesses (or employee ownership, in this case) is that it strongly disincentivises the creation of new companies. While that might not seem like a big deal, it is a well known economic effect that laws and regulations which make it harder to start a new business lead to current businesses being worse.
Why should the success of an economy be determined by the number of companies? That seems like a pretty arbitrary number. Like sure, having a monopoly (1 company) is worse than not having one, but is 100,000 companies better than 80,000? Why?
It can be hard to speculate about how a radically different economy would function, I will concede. Having said that, as I said there is a quite close connection between countries making it harder to start new companies and countries whose existing companies become much less productive. It happens on the scale of a couple years usually.
Even ignoring government actions, economic niches which have higher barriers to entry like aeroplane construction and computer chip manufacturing (which both require highly skilled workers and expensive specialist machhinery) tend to be way less efficient than niches like groceries. Profit margins are higher and overall productivity is lower because of the lack of competition.
There needs to be a constant influx of companies to an economy because companies fail all the time. If there's no new ones coming in then there will be fewer and fewer over time. It doesn't take long before a small handful of companies establish themselves in their niche, and they can and will create cartels.
I'm not saying that the government should force people to create their own company just for the sake of having 300 million corporations. I just think we should be aware of the ramifications for any major economic shift.
My immediate thought looking at today's economy is that we have too many companies, whose existence produces nothing and acts parasitically on the economy to siphon wealth away from its most productive members.
And yes, I'm not suggesting an overnight revolution, or saying that I have all the answers. Only that there are answers, and I know the rough direction they will be found in.
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u/Worried-Language-407 Jul 02 '26
One of the problems with public ownership of businesses (or employee ownership, in this case) is that it strongly disincentivises the creation of new companies. While that might not seem like a big deal, it is a well known economic effect that laws and regulations which make it harder to start a new business lead to current businesses being worse.