Too Big to Fail

Or

Too Big to Work

Paul Richardson August 7, 2012

It occurs to me that the conventional wisdom of our mainstream media which reflects very consistently the Progressive positions on issues is far off base. It is time to throw the pick off pitch for an easy out. Lets think about some of the oft offered truths. Big financial institutions are too big to (let) fail because the consequence to the economy would be disastrous. I say let them fail and let the free market pick up the pieces. The process would be far quicker and more efficient than any government intervention that only rewards malfeasance. It would also provide an object lesson to other similar organizations. As demonstrated over and over these big organizations are careening from one crisis to another. It always seems to be a surprise to the CEO who makes a huge amount of money to run the business. When organizations become too big they become unmanageable in a world where the pace of change is high. The big organizations have labyrinthine communication paths that just dont work well in a fast paced environment. Thus, the London whale at JPM, the LIBOR scandal at Barclays, now Standard Chartered allegedly laundering money for Iran. The too big to fail mentality also tends to lead to trying to push beyond the rules and often happens with relative impunity depending on how effectively the organization chose the recipients of their speaking fees, etc. Class warfare is the only way to achieve fairness in our society. That is, the only way the lower and middle of the financial pile can do better is to take it away from the top of the pile. This is the old zero sum game philosophy. It has

never been true. If it were America would still be a tiny country on the Eastern seaboard or swallowed up by someone else. The beauty of our used to be system is that it allows everyone the freedom to work toward doing as well as they want to. The current lurching toward a nanny state to take care of everyone is actually harming more people than it is helping. It works to convince too many people that they really cant do it on their own and need big brother running their lives. This fits the Progressive desire to eliminate the personal freedom and responsibility ideas of our founding and replace them with a command economy (socialism) where they are the elite experts who are in command. It may appeal to large numbers of people but remember socialism has never worked long term because the state always runs out of money (cant borrow more) and then it collapses. It is the old free lunch bit. There is no free lunch, ever. The reality that comes after the collapse is much more painful than it would be under the founders system where pain can be smaller spread along the way and be put behind you as a learning experience. Bigger and bigger government is required to handle all of the control functions of a command economy. We have all seen the benefits of big government. Inefficient, draconian, unable to change without adding on new functions while still maintaining the ones that dont work. An example is the Medicare regulations put out by the bureaucracy. Supposedly, even before The Affordable Care Act passed, the federal Medicare regulations that healthcare providers had to comply with to be paid by the system ran to over 800,000 pages. The bad health insurers have to

include those requirements into their plans and take the brunt of the criticism. Take a guess how much of healthcare is core service from doctors, hospitals, drugs, etc. and how much is related overhead involved in complying with the regulations. My guess is that the complexity added by the government about doubles the cost of healthcare. And we hear frequently of providers who game the system to extract millions fraudulently at the individual case level. Another too big to work example of the ineffectiveness of the excessively complex system. There are many more examples which could be made. A book could be written without covering everything. The point is that the trend of the last century in America has been to try to implement a command economy where government experts control more and more aspects of our lives. Progressives have always believed in big box solutions; big banks, big corporations, big unions, big government. This attitude became apparent with the Wilson presidency, where FDR and many of those working in his future administrations were working as training for the freedom to meddle they enjoyed due to the depression. It has ebbed and flowed since but on a positive trend. Allowing this trend to continue is not going to work. Why would this time be any different than all of the many past examples where it has been tried? The use of bread and circuses to distract people from the freedoms and opportunities they are losing is the progressive tactic. Many of you wont agree but perhaps this will cause some small amount of realism to impact your thinking.