Keane observations about life, politics and sports.

Friday, December 19, 2008

Too big to fail? No! Too big to succeed

To justify essentially socializing most of our financial institutions and now the auto industry it was frequently said this company or that company was "Too big to fail." In my opinion, that is completely backwards. The performance of these companies has demonstrated that they grew too big to succeed. A small bank is careful with their expenditures. A small bank chains their pens to the little table where you fill out the deposit slip. After mergers and buy outs a bank becomes humongous. The humongous bank pays out big bonuses based on the larger overall size of deposits, transactions, loans, etc. Instead of being careful, once a bank is dealing in billions and billions of dollars they stop understanding the value of money. They have an image to keep up so they buy million dollar pieces of art for the corporate offices, get a corporate jet, etc.

The best example of how growth leads to failure is the federal government. Our country started with an idea of strong local government and minimal federal involvement in local matters. As time has past, congress went from a part time job with very little compensation to a full time career with considerable compensation. In order to justify that increase, the federal government has gotten more and more involved in matters outside their jurisdiction. When the government was smaller any waste stood out. Now that the federal budget is measured in trillions, millions spent hardly raise an eyebrow and hundreds of thousands are laughed at as inconsequential. I've even heard Rush Limbaugh, who purports to be a conservative, laugh off earmarks as unimportant in the large scheme of things. Percentage wise he may have a point. And that sums up the problem. If we've reached the point where spending is so out of control that "conservatives" can consider wasteful spending as minor it is because they don't see the trees (thousands and millions) because of that massive forest (billions and trillions).

There may be others who get it, but no one is addressing spending as aggressively as Sen. Tom Coburn (R-OK). Here is an article from a Vermont newspaper talking about Coburn going after earmarks including money intended to be wasted in Vermont. Read this snippet:
Sen. Tom Coburn, R-Okla., listed Vermont’s barn census as one among 65 examples of “wasteful Washington spending worth more than $1.3 billion” in a report released Wednesday.

Vermont received a $150,000 grant from the federal Preserve America program to conduct a census of barns in the state and their condition. The amount was matched by $20,000 in state money while volunteers did the work, said David Mace, spokesman for the Agency of Commerce and Community Development, which includes the Department of Historic Preservation.

Coburn’s report implies without saying so explicitly that collecting information about barns is not a worthy project.

Mace takes issue with that. The Legislature has been funding barn preservation efforts since 1991, he said. “We can see value in attempting to preserve Vermont’s historic barns,” he said. “It’s unfortunate that’s it’s being compared to a lobstercam.”
No, Mr. Mace, what is unfortunate is seeing money confiscated from tax payers being wasted on counting barns. If you see value in preserving barns do it yourself on your dime!

Here is a link to Sen. Coburn's list of 65 examples. While this list "only" adds up to 1.3 billion dollars bear in mind these are just examples of what is a much bigger problem. The problem is the federal government is too big to succeed. A large part of the solution is to have the federal government only spend money on their own responsibilities. If something is not clearly a federal responsibility then the local government needs to decide if it is important enough to spend their own money on the project.

4 Comments:

Blogger smith said...

I got a grant from the federal government for $12,000 in financial aid, see how you can get one also at
http://couponredeemer.com/federalgrants/

December 20, 2008 at 2:38 AM

 
Blogger bob said...

Bill, Your right bigger as it concerns money and congress is not always better. I think when congress talks money they just throw away zeroes so the can comprehend the numbers,1.3billion looks alot smallers than 1,300,000,000

December 20, 2008 at 4:08 AM

 
Blogger ffrye said...

Large, As I watched the fiasco in October play out and the hijacking of our lives take shape I tried to comprehend the number seven hundred billion. Bob is right...they don't seem to comprehend the enormity of the figure. I settled on saying $700B this way...seven hundred thousand MILLION. $1B is one thousand MILLION dollars. A number I truly have fits comprehending in totality. Where is the sanity in our elected officials? Where is the tipping point for fiscal sanity to resume? I fear for our futures...moreover, I fear for my grandchildren's futures. Frenchie

December 22, 2008 at 5:12 AM

 
Blogger LargeBill said...

Bob and Frenchie,

You're both correct that the numbers are such that congress and the average citizen no longer comprehends the enormity of it.

You refer to a tipping point and it is a valid concern. I suppose the trick is identifying the point before we reach it so you know to stock up on ammo ahead of time. One potential tipping point people are talking about is caused by the tax code. We are nearing the point where the bottom 50% of wage earners pay no taxes.

December 22, 2008 at 6:03 AM

 

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