David Leonhardt, a columnist with the New York Times, has a piece about how getting big is about to get bigger, with consolidation activity expected to pick up.
Leonhardt writes about many companies that “have decided that their best strategy for raising profits involves getting bigger. Larger companies simply have more power — to compete with other giants, to restrain workers’ pay, to influence government policy and, in the long run, to increase prices … Airlines, banks and oil companies have merged in recent decades. So have retailers, hospitals, hotels, manufacturers, drug companies and law firms. The resulting behemoths have then taken advantage of their newfound scale, as well as globalization and digital technology, to grow further.
“For everyone else, the consolidation boom hasn’t worked out so well. Since the modern merger era began in the 1980s, corporate profits have surged, while family incomes have stagnated and income inequality has increased.
“Say this much for the corporate executives who argue that a bigger company can be more profitable: They know what they’re talking about.”
You can read the column here.
Leonhardt writes about many companies that “have decided that their best strategy for raising profits involves getting bigger. Larger companies simply have more power — to compete with other giants, to restrain workers’ pay, to influence government policy and, in the long run, to increase prices … Airlines, banks and oil companies have merged in recent decades. So have retailers, hospitals, hotels, manufacturers, drug companies and law firms. The resulting behemoths have then taken advantage of their newfound scale, as well as globalization and digital technology, to grow further.
“For everyone else, the consolidation boom hasn’t worked out so well. Since the modern merger era began in the 1980s, corporate profits have surged, while family incomes have stagnated and income inequality has increased.
“Say this much for the corporate executives who argue that a bigger company can be more profitable: They know what they’re talking about.”
You can read the column here.
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