not that business in general is reviled: more than 70% of Americans express confidence in small firms. Since Gallup began asking, the gap between the two has been wider only once. Indeed, the easiest way to make an industry sound sinister these days is simply to add the adjective “big”: big pharma, big food, big oil, big tech. From one angle the suspicion makes sense. Scale begets power: over prices, over workers, over suppliers, perhaps over whole markets. Yet being able to bemoan the supposed evils of big business is something of a privilege. Policymakers have long thought that economic growth was generated by nimble and innovative small firms. That view, however, is being challenged by a growing body of literature which argues it is big business that really matters when it comes to making countries more prosperous. In 2023 the World Bank overhauled its enterprise surveys, which quiz thousands of firms on hundreds of characteristics, widening coverage to include a number of major economies that had previously been missing. The latest release, in May, was the first to include all the new data. “What comes through very clearly across all the 164 countries: in high-income economies, firms grow bigger,” says Jorge Luis Rodríguez Meza, who runs the surveys. Across rich economies, the oldest firms—those aged over 25 years—are on average two-thirds larger, based on number of employees, than they were when aged between one and five years. In poor economies, they are only one-third larger. This result echoes—at much greater scale—the findings of a seminal paper published in 2014 that examined factories in America, India and Mexico. It found that 40-year-old American plants employed almost eight times as many workers as five-year-old ones. In Mexico, the ratio was just over two. In India, older factories employed fewer workers. The poorest countries are not distinguished from the richest ones by an excess of small firms, argues Mr Rodríguez Meza, so much as they are by a “missing top”, where there are too few large firms. That matters because the gap in economic performance between rich and poor places runs through their firms. Across the OECD, a club of mostly rich countries, the productivity of small and medium-sized enterprises
(SMEs) averages just two-thirds that of large firms. And a country’s firm- level labour productivity moves almost one-for-one with its GDP per person. In a recent paper based on the World Bank data, Diego Restuccia of the University of Toronto also points out that in poor countries there are far greater disparities in productivity even among firms of a similar size, suggesting that the market in these places does a poor job of disciplining unproductive businesses. Bigness, in other words, is not a sufficient condition for high productivity. State-owned firms, common in poor countries, are often cosseted. In rich economies, good businesses grow while bad ones wither. The findings have prompted soul-searching at the World Bank itself. The institution has long focused on helping SMEs, says Mr Rodríguez Meza, viewing them as “the good guys”. Now he concludes that “SMEs themselves don’t really matter if they cannot grow.” America should count its blessings. ■ This article was downloaded by zlibrary from https://www.economist.com/business/2026/08/24/americans-should-rekindle-their-love- for-big-business
Meta settles its blockbuster trial for up to $17bn The social-media colossus will alter the way teens can use its platforms Aug 27th 2026 This year Meta, the Silicon Valley giant that runs Facebook and Instagram, has suffered several blows in court. In March it was found to have deceived users about the dangers of its services in a case in New Mexico. In California a jury found that it and Google had been negligent in how they designed their platforms. But these trials paled in comparison with the one that began on August 18th, in which 29 American states teamed up to sue the company, alleging that its platforms harm youngsters, and that it knew of the damaging effects. The four states leading the effort as plaintiffs were seeking as much as $193bn in damages—roughly equal to Meta’s revenue in 2025.
Then, on August 26th, Meta and the attorneys-general filed a settlement agreement. In it Meta agrees to pay $12bn, and potentially as much as $17bn, in damages over the next ten years. (A separate settlement was reached with Texas for $1bn.) The firm has also agreed to various ways in which it will restrict use of Facebook and Instagram in the states it has settled with. Meta will adopt new processes to pinpoint the age of all users. For teens under 18, the total time they can spend scrolling will be capped at two hours a day, with a blackout period from midnight to 6am and no notifications from 10pm to 7am nor during school hours. Measures of engagement with posts, including “likes”, will be hidden for them. And they will be offered the option of switching to an algorithm-free chronological feed on Instagram that shows photos only from accounts they choose to follow. If all that spells catastrophe for Meta, nobody has told its investors. Its share price barely budged in response to the news. That is partly because litigation risk already weighed heavily on the company’s valuation, contributing to an earnings ratio below that of many of its fellow tech giants. But it also points to confidence that Meta will remain enormously profitable. The settlement it has agreed will allow the states to collect the maximum $17bn only if all other large social-media platforms—including TikTok and YouTube—have to pay similar penalties. A settlement with, or successful trial against, Meta’s competitors would also lead the firm to implement even tighter usage rules: teens would be limited to an hour at most on Instagram, and the blackout period on both it and Facebook would run from 10pm to 7am. The states are already getting to work. On August 25th Dave Sunday, Pennsylvania’s attorney-general, sued Snapchat, another social-media platform, over the risks its design poses to minors, leading its share price to tumble by 8%. The unique settlement reached in this trial will help ensure it does not give Meta’s rivals an advantage. Even so, lawsuits over the harms of social-media use will continue. Several states that were not part of the settlement are continuing to pursue individual cases along similar lines. Thousands of personal-injury lawsuits are still to be adjudicated. And more than 1,000 school districts have also sued the firm, with the first trials beginning in February next year.
Rob Bonta, California’s attorney-general, had described the case that has just been settled as Meta’s “tobacco moment”, likening the firm’s alleged deceptions to those that led to huge payouts by cigarette-makers in the 1990s. If measured by the dollars Meta has had to fork out, it has proved a poor analogy. The supersized settlement reached against big tobacco firms in 1998 involved a monetary penalty larger than their combined market value at the time. In a different sense, however, the analogy may turn out to be surprisingly apt. Even after these settlements, tobacco firms went on to turn huge profits. Investors who in 2000 purchased stock in Altria, then called Philip Morris, would by now have generated a 36-fold return, including dividends. Teens may soon be spending less time on Meta’s platforms. But it is a long way from being humbled. ■ This article was downloaded by zlibrary from https://www.economist.com/business/2026/08/26/meta-settles-its-blockbuster-trial- for-up-to-17bn
One thing America still excels at making? Pretzels How Pennsylvania became a powerhouse in the production of the doughy snack Aug 27th 2026 In the seventh century European monks began giving children twisted dough treats as rewards for learning their prayers. Thus was born the pretzel. (Purportedly the snack’s three holes represent the holy trinity.) It became especially popular in southern Germany, whose emigrants eventually took their favoured snack to America. Many congregated in Pennsylvania. Today the state produces four-fifths of America’s pretzels, and exports many abroad as well. Even as snack sales have suffered from the rise of private labels and weight-loss drugs, pretzels have proved resilient. In the 12 months to mid-May Americans bought $2.9bn-worth of the crunchy treat, up by 2.6% from the previous year, according to Circana, a data provider. A
dense cluster of bakeries is probably not what Donald Trump imagines when he speaks about reviving American manufacturing. Yet it represents a rare success for small, family-owned American factories. The “pretzel belt” traces its origins to Pennsylvania’s status as a haven for members of persecuted religions. William Penn’s tolerant rule of the state he founded attracted European outcasts such as the Pennsylvania Dutch (who in fact spoke German). That cultural group, which includes members of religious sects like the Amish, brought pretzels and, in some cases, a knack for business. The Amish eschewed many modern technologies, but other Pennsylvania Dutch were eager inventors and adopters of tools such as the mechanised pretzel-maker and deep-fryer. Pretzels are not the only snack in the production of which Pennsylvania plays an outsize role (the state is also home to Hershey, America’s biggest chocolatier). But they are the sphere it dominates most. The pretzel that caused George W. Bush to choke and briefly lose consciousness in 2002 was procured by the former president’s chef from his hometown of Lancaster, Pennsylvania. Some of the state’s better-known pretzel businesses, such as Auntie Anne’s, an eatery, have been acquired by national firms. But most remain locally owned. Pretzels also help draw tourists to the state. At Julius Sturgis Pretzel Bakery in Lititz, another Pennsylvanian hamlet, customers drive from New York, New Jersey and Baltimore to tour local snack factories (as well as to catch glimpses of the Amish driving their horses-and-buggies). Such attractions have boosted Pennsylvania’s travel industry, which brought in $50bn of visitor spending in 2024, the latest year for which data are available. Licence plates from as far away as Quebec and Alaska can be glimpsed in the parking lot. In the cars’ boots, undoubtedly, lie boxes of pretzels. ■ This article was downloaded by zlibrary from https://www.economist.com/business/2026/08/27/one-thing-america-still-excels-at- making-pretzels
An obituary for the Drexel generation A new book about Apollo offers a showcase of financial genius and human failure Aug 27th 2026 What is Apollo? No firm better embodies the transformation of the private- equity industry from the pin-striped corporate raiders of the late 20th century to the post-modern financial savants of today: it is part insurer, hedge fund, bank and university finance department. Yet its succession drama, recounted in “Money to Burn”, a forthcoming book by William Cohan, might as well be drawn from the pages of a Tom Wolfe novel. The story starts with Michael Milken, a junk-bond trader who led a financial revolution from the Los Angeles office of Drexel Burnham Lambert, an investment bank. He more or less created the market for risky corporate