The Scarborough Planning Board got its first look Tuesday night at a sketch for a 161,000-square-foot retail store and gas station surrounded by nearly 800 parking spaces on the old Scarborough Downs harness racing track property.
From the online comments, you would have thought the Beatles were getting back together. Maine may finally get a Costco store, and people are excited.
A rival of Walmart and Amazon, the Issaqua, Washington-based Costco corporation is the third biggest retailer in the country, selling a huge range of products from groceries and furniture to insurance policies. To its legions of fans (and big-box stores can have fans), it stands out from the competition not only for its low prices but also for its generous treatment of its employees.
I’m all for good wages and benefits, but Maine consumers should know by now that those low prices come at a cost. If it opens a store here, Costco won’t just compete with its rival Walmart but also with what’s left of the hardware, clothing, furniture and appliance stores that are owned by local businesspeople.
Sure, we’ll miss seeing the friendly storefronts in picturesque downtowns, but something much bigger is at stake. We could lose our freedom.
That was the view of Louis Brandeis, a lawyer, writer and Supreme Court justice who shaped antitrust law at the start of the 20th century.
Brandeis began his career in the “Gilded Age,” a time, like ours, when wealth was becoming concentrated in fewer hands. He observed that political power followed the money, and if the corporations were allowed to get too big, a small number of them would not only control the market place, but also become more powerful than the people, making democratic self-government a joke.
“The Curse of Bigness” was a term Brandeis coined in one of his essays, and it is also the title of a 2018 book by Columbia Law School professor Tim Wu, who is now an economic adviser to the Biden administration.
According to Wu, Brandeis’ view of antitrust law dominated American economic policy from the presidency of Theodore Roosevelt until the 1970s, a time of unparalleled dynamism and growth. Antitrust prosecutions forced the breakup of monopolies like J.P. Morgan’s U.S. Steel and John D. Rockefeller’s Standard Oil, speeding up the process of industrialization by expanding the number of companies that could compete. More recently, antitrust actions against AT&T and IBM created an opportunity for innovation in computing and software engineering that Wu says wouldn’t have been possible if telecommunications and computer manufacturing remained under monopoly control.
But starting in the 1980s, Wu writes, the federal government backed off on antitrust enforcement, allowing corporations to merge with rivals and slam the door to new competitors. Bigness became a blessing, not a curse.
You can really see the results in the big-box stores lining our highways. In 1982, businesses with fewer than 100 employees accounted for half of all retail sales, according to research by Stacy Mitchell of the Institute for Local Self-Reliance. By 2017 their share had fallen to a quarter of sales, and the number of small retailers was cut in half, from 1.2 million to 600,000. Starting a business has been the most reliable route for Americans to create wealth, especially for minorities and immigrants, but there were more Black-owned businesses in the 1970s than there are today.
It’s no coincidence that as the number of businesses competing in a market shrinks, wealth is concentrated in fewer hands, or that consolidation coincides with wage stagnation and a shrinking middle class. While some retail giants were growing by upward of 30 percent a year over the last three decades, the nation’s economic growth, as measured by GDP, bumped along in the low single digits.
Three brewers – Anheuser-Busch, MillerCoors and Constellation Brands (which makes Corona) – produce 75 percent of the beer Americans drink. Four beef packers account for 80 percent of the national market, and four airlines dominate domestic air travel. Most Americans have only one choice for a reliable broadband connection, if they have any at all.
Last year, three companies – Walmart, Amazon and Costco – accounted for 23.7 percent of all retail sales, and that share is likely to grow as the companies continue to crowd out the competition.
So, is it good news that Costco wants to finally plant its flag in Maine?
Maybe, if you really need one-stop shopping to book a discount vacation in Italy while picking up a new flatscreen TV and a quart jug of vanilla extract.
But if you want a vibrant local economy, where the money you spend on groceries stays in your community, it’s not.
Small businesses spread the wealth and create opportunity. They also keep the government out of the hands of robber barons.
If we are going to get through this second Gilded Age, we’ll need to find a way to break the Curse of Bigness.
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