Guest Post: What If ObamaCare, Too Big To Fail Banks, And The State Are All the Wrong Sized Unit?

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The State has monopolized all authority, giving it essentially unlimited power to make things worse.

I recently came across this excerpt from Preparing for the Twenty-First Century by Paul Kennedy (1993):


The key autonomous actor in political and international affairs for the past few centuries (the nation-state) appears not just to be losing its control and integrity, but to be the wrong sort of unit to handle the newer circumstances. For some problems, it is too large to operate effectively; for others, it is too small. In consequence there are pressures for the "relocation of authority" both upward and downward, creating structures that might respond better to today's and tomorrow's forces of change.

Though Kennedy (author of Engineers of Victory: The Problem Solvers Who Turned The Tide in the Second World War and The Rise and Fall of the Great Powers) is focused on geopolitical issues, this inquiry into the right and wrong sort of unit sizes appropriate to the challenges we now face also raises the larger question:

What if it's not just nation-states that are the wrong sort of unit, but also "too big to fail" banks, ObamaCare, the global corporation and every other large-scale, centralized organization?

ObamaCare: The Neutron Bomb That Will Decimate Employment (February 22, 2013)

Correspondent Mark G. stated the resulting hypothesis very succinctly: "We are exiting the era when large economic entities were the dominant form of human social organization."

If the Central State and the global corporation are losing integrity and control, it is not due to bad policy or mismanagement; more profoundly, they are the wrong unit size to address the emerging era's problems.

The State is too large to address most problems (actively making problems worse via Central Planning), and too small to address global challenges. The global corporation is too large to address the 90% of human life that isn't terribly profitable, and too small to resolve the implosion of the debt-dependent Status Quo.

The State has monopolized all authority, giving it essentially unlimited power to make things worse. Since the Status Quo in both developed and developing economies is at heart a crony-capitalist partnership of cartels and the State, the transnational corporation's authority ultimately flows not from the market but from the State that enables and protects its markets and margins.

In the larger scheme of things, what has happened is highly centralized concentrations of power, capital and authority have been expanding their control and reach for decades. Their growing unit size was once advantageous in terms of increasing efficiency, but now they have become the wrong sort of unit to address and solve the problems they have created or enabled.

Their utility has stagnated and is now in decline, following a classic S-Curve of rapid growth/high returns, stagnation/diminishing returns and decline/collapse.

Their very size and dominance inhibits solutions.

Correspondent Bart D. offered an ecological analysis of the dynamic:


The problem this causes is more akin to the problems of ecological 'monoculture'. That is: Monocultures are massively prone to catastrophic failures when conditions do not suit and thus require enormous amounts of inputs (including managerial expertise) than a diverse ecosystem/economy where if conditions (or management) cause some varieties to fail, there are others that will offset the losses.

My point here is the size of the unit matters only in that you can fit more small-sized units inside a given system, thereby giving it greater diversity and thus greater adaptability across a wider range of circumstances.


I guess it's like in a rainforest where when a huge and old tree collects all the sunlight up high ... then it comes down in a storm ... all the dormant seeds in the undergrowth now get a share of the light, germinate, grow ... then compete with each other for a share of the light until a single, large, old tree 'wins' and once again fills the entire space, stops the light reaching the forest floor, crushing all opposition. Well ... except the epiphytes that figure out how to attach themselves to the top of the tree and thus get a little light to live on.


In 2008 the economic big trees were in fact blown down in a storm. But some meddling fools stood them back up and tied them in place and put them on life support instead of letting them rot away on the forest floor and allowing the flush of new growth take hold. Meddlers take note: you can't fight the change that nature intends on an indefinite timeframe.

Correspondent Jim S. noted the abject failure of these wrong unit sizes to manage systemic risk:


The “wrong unit size” can be carried further to the topic of "risk and risk management", with its goal of eliminating any and all risk (the Status Quo infrastructures being the massive derivatives and their insurance instruments, quantity unknown, but of suspected very poor quality).

These are concepts inherently impossible to apply with adequate results as the world is structured. The Status Quo risk management system is known to be utterly flawed and vastly leveraged/overextended as the Western monetary, fiscal and welfare spheres currently demonstrate, and the wrong size of management unit is certainly applicable. Large or small in intent or scope of action, the world has failed, as it always has, at risk management.

Risk management and ecology are two sides of the same coin. A diversified ecology of many units and many unit types is intrinsically more resilient than centralized-authority monocultures.

I have long viewed today's State and its various fiefdoms as versions of the centralized factory model. Education, for example:

Is Our Education System Based on a Factory Metaphor? (November 15, 2005)

The solution is a decentralized system of many options and a spectrum of units and unit sizes:

The Nearly-Free University (November 15, 2012)

The "End of Work" and the Coming Revolution in Education (June 7, 2011)

Since concentrations of centralized capital, authority and power does not relinquish control easily, if ever, the Status Quo will have to decay and implode before authority can be pushed down to more responsive, appropriate levels.

The solution is to push authority down to decentralized units of local, opt-in, collective-intelligence organizations that are much more diversified and better sized to respond to both local conditions and feedback and global networks of similar-sized units.

This essay was drawn from Musings Report 7 (2-16-13), The Wrong Unit Size. The Musings Reports are sent to subscribers and major contributors. More information can be found below.

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Super Broccoli's picture

print bitches ! you can't run fast enough to escape the BUNGAPOCALYSE !

knukles's picture

If they're the wrong sized units?
Whose askin'?


Oh yeah, like "What if there were no rhetorical questions?", right?.
Now I get it.

hedgeless_horseman's picture



The State is too large?  Doesn't seem to be hurting Texas, where everything is bigger. 

According to Forbes, 5 of the top 6 cities for "Good Jobs" are in the Lone Star State.


IridiumRebel's picture

Big State
Little .gov

Texas: It's like a whole other country....and we're working on BECOMING a whole other country,

hedgeless_horseman's picture




Press play, lean back, and close your eyes for 10 minutes.

eatthebanksters's picture

I live in California...we're a big state, we're a beautiful state, and we are a fucked up state.

TruthInSunshine's picture

The most foul 4 letter word BY FAR:  D-E-B-T

The cost of living increases, decimation of the middle class, non-reported inflation, KronyKomradeKapitalism/Nepotism/Incest at the top, trillions in theft from actually productive taxpayers in order to fill the mouths of the banking/military/financial firm/BigPharma-HealthCare complex will continue until Amerika's morale improves.

Its not as if:

Nearly 50% of all Americans have more in credit card debt than they have in emergency savings (or any savings of any kind)


--or that--


U.S. consumer borrowing has risen to a record $2.75T


--or that-- 

Nearly half of Americans have less than $500 in savings.

FORWARD Debt serfdom, bitchez! Charge [it] !!!!!!

Buckaroo Banzai's picture

"That's right you're not from Texas...but Texas wants you anyway." -- Lyle Lovett


EscapingProgress's picture

Two excellent reads (anarchist oriented) authored by Dennis Fox that are related to the guest post.

If you think that "anarchy" is interchangeable with "chaos" then I urge you to read the articles I posted. You will learn that this opinion is nothing more than a common misconception stemming from outright ignorance concerning anarchist philosphy.

IridiumRebel's picture

I got this Hedgie....YO DR. DOWNVOTE: EAT A DICK. YOU PISSED TAXIFORNIA IS GETTING ITS BIZ SUCKED AWAY BY TEXAS? We will see who ends up where.....go pick up your fucking EBT and SNAP card ya fucking drain on society,

marathonman's picture

You all may go to Hell, and I will go to Texas.  Davy Crockett

Hongcha's picture

I have never been on the ground in TX; only passing through the airports.

I asked a Dallas-born colleague to describe present-day Texas.  He replied:

"Hot, fat and Mexican".

knukles's picture

I saw that :)
Lotta redaction these days, what?
Hmmm... that cursory look over the shoulder....

akak's picture

Wild lupines --- beautiful flowers!

We have them in Alaska too, but virtually nowhere like on this scale.

BigJim's picture

In Alaska they get all trampled by the elephant-sized mosquitos

kaiserhoff's picture

Right purty, HH.  What are they, blue bells?

akak's picture

Those flowers are called lupines.

hedgeless_horseman's picture



Texas Bluebonnet is the State Flower, Lupinus texensis.

akak's picture


Must be a local name --- everyone else everywhere else knows them as lupines.

alpha60's picture

He said lupines. Lupines.

Joseph Jones's picture

Like maybe for instance: Are we saying it might not have been such a great thing that my aunt and uncle, who both died now and were members of the Shriners (AKA Freemasons aka Judaism offshoot aka anti-humanistic ancient Babylonian/Egyptian mysticsm, racism, bigotry and sexism) "million dollar club:" Shrine inherited over $1M from my aunt and uncle.  

When her husband was sick shortly before he died he needed one of those motorized wheelchairs from the company who annually sells about $400M worth of these god forsaken freebies to old rich white people like my dear relatives.  You and I bought it with tax funds, arouund $7k IIRC.  After he died, my aunt sold it for a few thousand dollars, fretting because she wanted to get as much as possible for something taxpayers gave her for free.

That money now in the hands of the Judaics, er, Freemasons, er Shrine.   

Oh the humanity. 

GrinandBearit's picture

"Are you threatening my bungahole?"

LFMayor's picture

I need fiat for my bungahole.

AssFire's picture

I hope it all fails: every federal government program and the banks.

knukles's picture

Well, that's a bit dramatic.
Like, you're doubting the veracity of the U.S. Board on Geographic Names (BNG)?

GeezerGeek's picture

It seems to me that the intended structure/hierarchy of governments within the United States would provide the solution to wrong-sized government solutions. Too bad the US let a bunch of powermongers succeed in centralizing authority and power in DC, to the detriment of responsive governments in the 50 states, their counties/parishes and cities/towns. If enough people cared (and we know that somewhere around 50% want freebies from DC) then it would be time to stock up on tar and feathers, applied soon to a Federal official (elected or appointed) near you.

I wonder where all the congressmen and senators will go when everything comes to a grinding halt. Certainly they won't be able to go home any more.

Mr. Hudson's picture

: "I wonder where all the congressmen and senators will go when everything comes to a grinding halt. Certainly they won't be able to go home any more."

Well, at least they are planning ahead. What are the complainers and whiners doing to prepare for what is coming? More complaining?

mayhem_korner's picture



Let's be clear: there are only wrong-sized government solutions.

Vashta Nerada's picture

Government is sometimes a necessary evil, but it is always an evil.

MachoMan's picture

Not sure why this got down voted, but it's the skeleton in the free market capitalists' closet...  no one wants to talk about it, but it's the paradox of capitalism...  it must always give birth to the son that kills it.

NidStyles's picture

No it isn't. It's essential for Liberalism, but not Capitalism, which came well before Liberalism.

MachoMan's picture

Could you please post a single historical example where your thesis is correct.  Also, could you also explain why we never achieve perfect competition, in any market, despite this being a pillar of capitalism?  (hint: rational actors avoid it).  Could you also please speculate as to the source and process of how the wealth gap gets created and what this does to any system's stability over time including, but not limited to, changes to the rights afforded all citizens.

Bicycle Repairman's picture

"It seems to me that the intended structure/hierarchy of governments within the United States would provide the solution to wrong-sized government solutions."

Correct.  Too many functions more rationally handled at the local and state levels were needlessly federalized.  Time to decentralize.  Quickly and radically.

Time to flush the phony "60s revolution" down the toilet.

marathonman's picture

Over on, there were some articles discussing that the US Constitution was a coup by the Federalists to eventually get to the big government model that the British had perfected.  I believe that is true.  All the people arguing about getting back to the Constitution, miss the point that the Constitution was a Federalist stalking horse.  Under the Articles of Confederation, had already beated the British Empire.  The more perfect union contract was really a noose.  It only took a few generations before states rights were eviscerated and the national government control was complete.  I imagine Lincoln acted a lot like Obama back in the day.

Bicycle Repairman's picture

Flush the 1860s revolution as well.

SoCalBusted's picture

Businesses have this same cycle.  There is a rush to centralize everything for "efficiencies" and "control" then a rush to decentralize to be "closer to the customer" and "more agile".  The difference is that businesses realize these imbalances and the pendulum eventually swings the other way before it all crashes.  On the other hand, the government has no internal self correction mechanism except for the people.  But the feedback loop is broken.

MachoMan's picture

So you're really going to try and separate business interest from government action?  Your cause and effect is backwards.  Government has no feedback mechanism because it's not intended to...  after the first movers get a foothold (the trees rise above others), government does nothing but work towards the consolidation of power in both itself and its beneficiaries (not everyone).

Businesses have no better feedback mechanism than government...  because they're the same thing.  You could try and limit "business" to local and of a particular size and variety, but I'm not making your arguments for you...

SoCalBusted's picture

Not attempting to make a specific connection other than the general idea of organizational strategy.  Business does have a feedback loop.  It's called revenue and profit - cost of operations implied. Even applies to a single mom and pop store.  Do you put all the bread in the bread section or do you also put some sliced bread next to the peanut butter display?

MachoMan's picture

You're making an academic argument about what businesses "should" do...  the reality is that our businesses are hopelessly dependent on government largesse, imposed barriers to entry, and sanctioned/supported wage arbitrage.  Automakers, airlines, banks, sports, medical...  you name it.

I agree, on paper and in concept, businesses have feedback loops that get implemented in this never ending attempt at self improvement (presumably for competition)...  I get it...  the problem is that this has nothing to do with the real world.  When faced with this death struggle, businesses throw up their hands and say fuck it and demand a third party to interject and ensure their continued dominance.  While competition may inevitably seep through, the reality is that "creative destruction" may take much longer to occur than most believe...  to the point of being practically nonexistent.

To keep the original author's reference, does the tree who makes it above the canopy desperately try to let other trees up next to it to compete or does it drown out their light in the hopes of eliminating any competition?  Once the canopy has been reached, how much does the tree then try to continue to increase its height?  Humans are no different... 

Also, as a practical matter, large businesses are as bureaucratically inefficient as the government...  they're practically indistinguishable.  Think about how long they've been able to float simply from cutting fat...  5 years and counting...

mayhem_korner's picture

The solution is to push authority down to decentralized units of local, opt-in, collective-intelligence organizations that are much more diversified and better sized to respond to both local conditions and feedback and global networks of similar-sized units.


Where I live, we call these organizations "neighborhoods".  They are very functional so long as the statist types don't form an HOA.


NoDebt's picture

Funny how the guys who wrote the Constitution a few hundred years ago knew this and tried to address it by limiting the federal government's scope of authority and keeping more stuff pushed down at the state level and below. 

Must be something about human nature that always wants to push more and more stuff up to one big central authority until it becomes unwieldy and starts to collapse under it's own weight.

Vashta Nerada's picture

It is human nature to want to be the central authority who tells everyone else how to live, or at least to be a camp guard for the regime.  The collapse is an unintended, but forseeable consequence.

akak's picture

Speak for yourself.

In fact, I flat out deny your premise --- it is solely in the nature of sociopaths to want to rule over others.

Vashta Nerada's picture

Sociopaths are humans, too!  I think I saw that on a T-shirt once.  Sociopaths are drawn to government service - in the private sector, brute force doesn't work so well.

TheFourthStooge-ing's picture


Sociopaths are humans, too!

No, they are not, and they must be crushed into a paste.

akak's picture

US 'american' sociopath pastecrushingism nature is eternal.

kaiserhoff's picture

Jewish mothers are human?  Who knew?