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Scott Rasmussen's Number of the Day for October 4, 2017
The Number of the Day columns published on Ballotpedia reflect the views of the author.
October 4, 2017: From 1950 to 2009, a total of 28,853 companies were listed on U.S. stock markets. Seventy-eight percent (78%) of them had disappeared by 2009. Of all publicly traded companies at any given time, half will be gone within 10 years.[1]
This data suggests a vibrant economy that forces companies to keep serving consumers in order to survive. Even the most powerful companies are unable to stay on top for long periods of time.
Still, many corporations seem to dominate the economy and the public imagination for a period of time. In today’s world, companies like Google and Facebook fill this role. Such companies are so dominant that many people believe they can never be stopped. But history suggests that they will maintain that exalted position for only a brief period of time.
Fifty years ago, General Motors was such a company. It sold 49 percent of all cars purchased in the United States.
John Kenneth Galbraith, a Harvard professor of economics, wrote that GM’s position was so dominant that it could no longer be constrained by either consumers or competitors. Galbraith, who served in four presidential administrations, made that claim in a book, The New Industrial State.[2] In his view, the auto firms would never compete with each other because they shared a common interest in soaking the consumer by raising prices.
Eleven years later, Galbraith updated the book and repeated his claim that no other auto company would be foolish enough to take on GM. Why? “Everyone knows that the survivor of such a contest would not be the aggressor but General Motors.” The auto giant’s market share was still a remarkable 46 percent at that point. It never again reached such lofty heights. In fact, GM’s share of the market declined for 29 of the next 36 years, eventually leading it into bankruptcy and a government bailout. It went from selling 46 percent of all cars in 1978 to 35 percent a decade later, 29 percent a decade after that, and just 17 percent in 2014.
In my book, Politics Has Failed: America Will Not, I explain what happened. “Firms like Toyota, Honda, Nissan, and Hyundai didn’t read Galbraith’s warning of how they would surely lose by taking on General Motors. In 1978, those firms had a combined 8 percent of U.S. auto sales. Within a decade, that share had doubled to 17 percent and has since doubled again to 35 percent. In recent years, Toyota alone has sold more cars worldwide than GM.”
GM’s story is not at all unusual. Of all the Fortune 500 firms in 1955, only 12% are still with us today.[3]
Each weekday, Scott Rasmussen’s Number of the Day explores interesting and newsworthy topics at the intersection of culture, politics, and technology.
- October 3, 2017 – 62 of 100 largest cities have Democratic mayors
- October 2, 2017 – 122 billion dollars: increase in annual regulatory costs added during Obama administration
- September 29, 2017 – 4 trillion dollars in federal spending during Fiscal Year 2017
- September 28, 2017 – 64 percent of Americans believe football players should stand during national anthem
- September 27, 2017 – 295 years ago today, the Father of the American Revolution was born
- To see other recent numbers, check out the archive.
Scott Rasmussen’s Number of the Day is published by Ballotpedia weekdays at 8:00 a.m. Eastern. Click here to check out the latest update.
The Number of the Day is broadcast on local stations across the country. An archive of these broadcasts can be found here.
Columns published on Ballotpedia reflect the views of the author.
Ballotpedia is the nonprofit, nonpartisan Encyclopedia of American Politics.
See also
Footnotes
- ↑ West, G. (2017). Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies. New York, NY: Penguin Press.
- ↑ Galbraith, J.K. (1967). The New Industrial State. Princeton, NJ: Princeton University Press.
- ↑ A Wealth of Common Sense, "Why Cities Survive & Companies Die," September 28, 2017
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