What Is Too Big?

There is a popular TV program called something like, “The Greatest Loser” (I don’t watch it) which have a bunch of obese people losing weight. That’s a good deal as they are too big for they own wellbeing and if left uncheck, they will become a burden upon society. They are too big. Yet, over 1/3^rd of U.S. adults are obese which leads to heart disease, stroke, type 2 diabetes, some cancers all of which cost an estimated $147 billion in medical expenses. On an individual level that is $1,429 per obese person. This information comes from http://www.cdc.gov/obesity/data/adult.html  complete with maps etc. I’m sure you can find other sources that make the figures even higher.

But there are other forms of obesity that affect our country and its citizens as well. Many banks are obese or they are just too danged big to be properly controlled and therefore are diseased. J.P. Morgan’s latest fiasco is a good example. We have all heard now that some banks too big to fail. Poppycock. Put them on a diet like obese people, meaning break them into smaller components through antitrust laws. That way they get some sort of accountability built into them so they are less likely to fail and cost their insurers, us, money to bail them out.

We have broken up big business before in our country for the health of the country and for more fair competition. So off with Wall-Marts head, make them into mini Wall-Marts, that cannot manipulate the sellers of the products the resell at an advantaged price level. It worked for Ma Bell it can work for others.

Even Wikipedia gets it: This article is about the phrase in economics. For the 2009 Andrew Ross Sorkin book, see Too Big to Fail (book). For the film based on the book, see Too Big to Fail (film).

"Too big to fail" is an American English colloquial term in regulation and public policy describing certain U.S. financial institutions as so large and so interconnected that their failure will be disastrous to the economy, and therefore the federal government has a responsibility to support them when they face difficulty. The term is also referred to when businesses deal with market complications related to moral hazard, economic specialization, and monetary theory.

The term "too big to fail" was popularized by U. S. Congressman Stewart McKinney in a 1984 Congressional hearing, discussing the FDIC's intervention with Continental Illinois.^[1] The term had previously been used occasionally in the press.^[2]

Proponents of this theory believe that the importance of some institutions means they should become recipients of beneficial financial and economic policies from governments or central banks.^[3]One of the problems that arises is moral hazard whereby a company that benefits from these protective policies will seek to profit by it, and take positions that are high-risk high-return, as they are able to leverage these risks based on the policy preference they receive.^[4] The term has emerged as prominent in public discourse since the 2007–2010 global financial crisis.^[5]

Some economists such as Nobel Laureate Paul Krugman hold that economy of scale in banks and in other businesses are worth preserving, so long as they are well regulated in proportion to their economic clout, and therefore that "too big to fail" status can be acceptable. The global economic system must also deal with sovereign states being too big to fail.^[6][7][8][9]

Critics see the policy as counterproductive and that large banks or other institutions should be left to fail if their risk management is not effective.^[10][11] Some critics, such as Alan Greenspan, believe that such large organisations should be deliberately broken up: “If they’re too big to fail, they’re too big”.^[12]

I think likely most folk don’t think there should be businesses too big to fail; they should be subject to the same failure risks as small businesses. If the government has to intervene, then that business is too big and should be broken up to enable the free enterprise system to work as intended. The founding fathers or even Adam Smith did not visualize these business behemoths.

Furthermore, how do we justify local, state or national tax breaks given to certain businesses to induce them to locate in a particular area? (A sin Wisconsin’s Lt. Governor, Rebecca Kleefish holds up as a good thing for our state. “Gee we stole a business from Illinois, goody for us.”) This comes at the expense of businesses already established in an area that do a perfectly good job and don’t receive tax breaks or incentives. I have written about Cabella before which demands such tax advantages before they will move into an area and they are not alone. For a reminder see: http://blogs.star-telegram.com/politex/2010/01/report-tax-break-for-local-cabela-superstore-among-perrys-worst-gambles.html

The Baseline Scenario (http://baselinescenario.com/2012/05/17/why-markets-wont-fix-jpmorgan/) make an excellent point as to why markets cannot fix J.P. Morgan. James Kwak writes that don’t ask the question of whether they want to make money or lose it; instead they look at layout structures. They don’t worry about social risk they want big pay for CEOs and placate investors with dividends. Too much to go into here, just read the article.

Jesus talked about the body as a temple of God and that we should take care of it as such. But temples are not things to worship; they are places where people come to worship. And worship means acknowledge a deity who is greater than ourselves and upon which we are dependent; totally. Our current economic system has far too much idolatry in it. Again, as Jesus said you can worship God or Mammon but not both. (Mammon means material wealth or greed.) Those entities are innately against each other as objects of worship. Money is not bad in scripture; it is the love of it that gets us in trouble. Money is good and should be distributed to the benefit of all not the few.

In our case bigness in business often leads to such idolatry and equity for the members of our society. The 99% know that, the 1% are acting as pagans.

Of course you could make the argument that this article is too big.