The slogan of the statists is that banks should be "Too big to fail."

Dr. Alan Greenspan encouraged the consolidation of banks because that made them stronger and more efficient. He, a friend of Ayn Rand, should know better. Age and federal office kills brain cells, so they say. There is this: The little banks can not afford a room full of compliance officers and lawyers like a big bank can. Of course, without a Federal Reverse Bank or congressional regulation no lawyers would be needed. Just bankers.

Actually, this disease has been caught by many structures in our society that should know better. "Local and private" suited churches, schools, businesses (especially retail), unions, lodges (Nineteenth and early Twentieth Century insurance companies), political parties, hospitals, and almost everything else. Or, consider states and cities and counties which were once the fundamental units of governance in our nation.

Not any more. Maytag and Amana are one company now. I work for Home Depot instead of the mom and pop flower shop of my youth. We are rapidly coming to a national school system. Insurance companies are so big they control a significant percentage of our capital markets. Little banks are nearly gone. Medicine is run by the federal Medicare machine. Local churches, who believe in Christ, find themselves members of organizations like the National Council of Churches, which believes in Marx.

If a local business makes a mistake, even a very bad one, only one business will go up for sale. There will be a buyer because everything else is okay and there will be enough currency. So the owners and customers may be hurt but they will not suffer for long. But if a national business makes a mistake everybody, not just the owners and customers of that business, suffers. Capital evaporates. No one else can afford to buy it because it is so big. Some critical product or service goes away.

One person or one board of directors blew it in both cases. We are, after all, human. (Unless elected to Congress where no mistakes are made.) But the suffering is temporary and personal in one case but can be national or even global in the other.

There is the efficency argument, that one board and chairman can run a hundred little banks and afford the room full of lawyers. Yes, true. And sometimes markets will pull business in that direction and usually it works out. Or, if times change (technology, weather, politics), perhaps markets will pull large organizations apart. As long as millions of people, as they buy stocks, are making these decisions the swings and adjustments will be gentle and correctable. The danger is when the government gets involved and encourages the aggregations, because they always go too far, they never correct themselves, and they always go toward centralization.. That is, in part, what has happened to us. We are left with no where else to turn.

But the biggest problem with bigness is that it freezes innovation. A local gas station can change his prices every ten minutes if he wants or sell out in a couple of months or change his pumps one at a time. Not so a giant company. And no matter how smart people are, no matter how many studies they do, they cannot respond to local conditions or temporary situations fast enough. This goes double, quadruple, an order of magnitude for Congress. Once a regulation is promulgated it may be expanded but never deleted.

How is it that a congress person knows who should get mortgages at what rates? We would get a better guess from a priest or bus driver. Maybe bankers should write speeches for their representatives. Wait a minute, maybe they do.

The simple fact is that government cannot know enough detailed information to set the price for a pencil, much less for money. It is way past arrogance for a national government to try and control the value of their currency in a global market.

We have become too big to succeed.

Charles Johnsen
The Faithful Heretic at The Western Abzu
chj3@westernabzu.us