______________BP______________ __________Too Big to Fire__________

Government to BP Oil:  “You’re fired!”

It won’t happen.

_________________________________________________________________________________

Let’s play back the tape and see what the recurring theme is:

Investment and Mortgage Banking – Too Big To Fail

Health Care System – Too Big to Fix

American Automobile Industry – Interconnected Industries Too Big to Let Die 

       and, most recently:

Big Oil Blowup –  BP Oil Technology Too Complicated for Federal Takeover – Hence, BP Too Big to Fire

It is not a curious matter that none of the above occurrences represent government that is too big.  Rather, they represent corporate bungling on a scale so immense that government ended up being the controlled and not controlling one.  The very nature of larger and larger corporate size through loosely regulated market consolidation has, with greater frequency, backed the Federal government into a corner.   The government in case after case has essentially been forced  to reactively capitulate to corporate fumbling, incompetence, and other sorts of mishaps;  because to not do so would cause even more harm to its other constituencies.

A corporation’s successful development in America is a race to be the first (or second) to the top.   To be the first (or second) is usually the formula to be the biggest.  Entrepreneurial discovery,  innovation, and product development is a race to the patent office, then to the venture capitalists and banks; and, finally, a race to go public.  If a company can be the first to go public, it can be the first to generate the massive funds to scale up and get its name and product out there first.  This is immensely important because it  provides the means to dominate the market by acquiring its smaller, but potentially dangerous, competitors.  It’s not that competitors products wouldn’t prove to be better, it’s usually that the competitors are smothered by the avalanche when beaten to the punch.  The losing competitors are usually left the scraps of only being able to eat around the edges of the big, new pie.  The slow, chiseling background sounds of competitors are  just a reminder to the winner that it needs to continue its voraciousness to dominate.

An inevitable result is that most industries mature into a couple or maybe a few dominant players.  These dominant players, in effect, end up by virtue of their early success in controlling large parts of societal infrastructure.  The reliance upon this infrastructure is usually so great and so widespread that even minor disruptions, glitches, or upheavals of the dominant players are immediately and widely felt. 

Recall a while back when Twitter had a very brief technical mishap that disrupted its service.  Half of the United States seemed to go aflutter or atwitter over this.  Think of brownouts or temporary power outages by utility companies, cellphone system mishaps, or internet service provider interruptions.  These are relatively small inconveniences that cause palpable public panic attacks.  When e coli or salmonella outbreaks threaten, it causes systemic fear.  Bad milk, tomatoes, apples, lettuce, spinach, or beef cause havoc throughout society because of the reality that big corporations control so much of the food sourcing.   If Tyson Food has gas, the chicken industry burps in disharmony. 

When the scale of problem becomes a notch or so higher on the calamity scale, all hell can (and does) break loose.  I think that it’s time for the United States to take a necessary and healthy step forward and begin to regulate the extent to which a company can gain market share.  We have seen more than enough of the steroidal corporations that dominate to the point of societal damage.  The benefits to society of the economies of scale have a ferocious proportional step-brother – the massive disasters that occur when the incompetent or greedy side of scale reveals itself.  These corporate catastrophes not only paralyze society; they render government virtually impotent.

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Published in: on May 28, 2010 at 6:38 pm  Comments (3)  
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3 CommentsLeave a comment

  1. Even worse is these failed corporations run the government through their paid bought lackeys. In that sense Obama is no better than Bush and probably much worse. Obama is being led around by the nose by BP, Goldman Sachs and anyone else that want to pay his retaining fee. He is just a PR liar for them.

    If this was his top priority he wouldn’t have to tell us – it would be obvious. If he was a leader he wouldn’t have to tell us it would be obvious. If he was in charge he wouldn’t have to tell us it would be obvious. If he is responsible for all the bad decisions then he should be prosecuted along with BP, Transocean and Halliburton.

  2. To the post above….. Conspiracy much? Stop acting like a true Nazi. Within the past 100 years, there have been very few presidents that were not “PR” people as you say. Since you have started the stupid conspiracy theory, I will take it a step further.

    It is funny there has NEVER been an off shore drilling incident of this magnitude, or any at all. Now since off shore drilling has been given the “OK” by political leaders and the public alike, there is all of a sudden a HUGE problem and all future drilling is halted? I believe something is going on here. More drilling equals more oil, which means lower barrel prices. The oil countries have said it themselves, they cannot survive on less the $75 a barrel to fuel their countries growth. (2008 when barrel prices fell below $40 and OPEC got together to SLOW production to INCREASE prices. Their excuse was a population that has been getting too much oil for too long)

    My point is, we made big oil huge, and when electric cars come out, and hybrids become more popular, and lithium air batteries produce 3 times the amount of energy as gasoline or natural gas, BIG OIL has the money to lower prices for a few years to destroy the interest in the better technologies. Equally, they have the power and the funds to blow up a few oil rigs to halt exploration that would literally half the cost of a barrel of oil.

    BP profited about $14B last year and no one on their over paid staff can come up with a kill tactic to stop this oil? Draws a few red flags for me.

  3. Mr. Funk,

    I must respectfully disagree. The situations you mention (Bank bailouts, healthcare bailouts, auto bailouts, and yes, even BP’s oil spill) are actually a result, in large part, of government that is too big. You are simply focusing on the seen, versus the unseen, and assuming too much goodheartedness about the government’s reaction to each situation.

    If you really want to most effectively “regulate the extent to which a company can gain market share,” then you must stop the bailouts! If a company foolishly grows too big to be supported by the market, then it will fail. And we should let it. This will do more to effectively and efficiently regulate company size than any other alternative.

    And please don’t fall for the misconception that it will cause too much harm to allow them to fail. Will it cause harm and pain for many people? Yes, but only in the short term. Long term, it will lead to less harm and pain. It is like a hangover – will it cause pain to stop drinking? Yes, but it must be done. Kicking the can down the road only leads to greater pain later.

    Don’t forget – greater regulations only lead to greater opportunities for regulatory capture, as Emery noted in her May 30 comment. Don’t want the regulated to take over the regulators and thereby cause the public harm? Then the answer is have less regulatory power. When you concentrate coercive monopoly power, you increase the incentives for the ruled to seek to become the ruler. Such a situation will always reward the stronger at the expense of the weaker. Human nature being what it is (i.e., sinful), better regulations and more honest regulators are not the answer. Greater political power always leads to greater corruption.

    Any thoughts on this?

    No King But God


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