11.30.2010

Big is OK

I just found this gem by Michael Lind, Policy Director of the Economic Growth Program at the New America Foundation which is particularly timely after my debate on Corporate and Government power. Lind does a better job than me at pointing out the flaw in conservative criticisms of Big Government and corresponding liberal criticisms of Big Business and how thinking small (or local) is dangerous in our current economic predicament when growth is needed most.

The new right was inspired by Ayn Rand to go Galt; the new left was inspired by Tolkien to go hobbit. The new right and the new left rebelled against industrial modernity in different ways -- the former by withdrawing children from public schools for 19th-century home schooling, the latter by growing their own food in back-to-nature communes. But they shared a dread of technological modernity and large-scale organization.
Nearly half a century later, the small-is-beautiful heresy has become the stifling bipartisan orthodoxy. Republicans ritually denounce Big Government and Democrats ritually denounce Big Business (even as both parties take money from Big Banking). The adjective "Big" has become pejorative.

He also touches on the problem we face when Big Business and Big Government become intertwined, which I particularly appreciated...
Like any other institutions, Big Business and Big Government can go horribly wrong. The horror is compounded when they go wrong together. That is what happened in American finance in the last three decades.
Colossal firms or networks of firms make sense in industries with increasing returns to scale, like aerospace and automobiles. But it is not clear that there are significant economies of scale in banking -- and there may be significant diseconomies, as large-scale larceny and incompetence on the part of our newly formed, giant, universal banks would suggest.
It is one thing for government, as the senior partner, to promote a strategic industry, and quite another for the government to be captured by a special interest. Many of the members of Congress and executive branch officials charged with supervising the financial industry have in fact acted as its agents, in return for campaign donations or lucrative post-government careers.
I'll start paying more attention to Lind's own blog on Salon.

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