There are a few things I liked about America from day one. One of them was the Rule of Law. Second was the ease of starting a business; and obviously you have the American Dream where anyone can become anything.
But there is one thing which I did not like. It was big corporations. My initial discontent started with my fighting with AT&T on cellphone bills, then home phone bills, then the Internet.
I thought AT&T was the only culprit until I got Verizon Datacard, and in one single month they charged me $220.00 for not even using the phone. The logic went something like this: since I changed my plan in the middle of the billing cycle, the whole billing cycle would be charged to me at some three or five dollar per minute or per byte rate. Something of this sort.
Unfortunately I had direct payment set up from my credit card. So it took me six months to get $1400.00 refunded.
Very soon I started in business and saw the positive aspects of capitalism. Except one: big banks. I heard that it was very easy to get financing from banks. But it’s almost impossible to get a credit line from a bank if you are not big enough. As our growth continued, I had to resort to factoring (accounts receivable financing). Factoring is the corporate version of loan sharking. Almost all the money a company made went to pay finance charges, which were close to 20%. One bank finally agreed to provide us a line of credit. And since then we have been in good shape.
We did face a cash crunch a number of times, and I am a strong believer that crises build the character of a company. I do not think I would have understood the value of cash flow if we had been VC funded.
Another thing I had heard was that corporations have limited liability. When you go to deal with banks, this is the first thing they throw out the window. But this part I now understand and agree with. If you who is making the decision aren’t ready to risk your personal assets, why should a bank?
Anyway, all said and done, all these hurdles helped the company build its character.
Coming back to the original topic, corporations that are too big can also lead to monopolistic practices. Remember the East India Company?