Uncle Sam Too Fat

In the WSJ, Daniel Henninger asks Uncle Sam: Too Fat to Fail?:

…Mark down 2008 as the year that many large public and private institutions hit the wall. Suddenly, in different ways, they were manifestly failing. Why?

Tuesday’s presidential debate offered a glimpse. Amid the din of crashing banks in the U.S. and Europe and stumbling government efforts to plug the dikes, Barack Obama and John McCain airily promised to wave into life one grandiose solution after another for health insurance, Social Security, energy supplies and incomes. Do serious voters believe any of this?

Some weeks ago Barack Obama got into trouble for saying a difficult question was “above my pay grade.” That plastic droplet of modesty is the beginning of wisdom. Step back and behold how much before us is above anyone’s pay grade.

Consider the magnitude of these problems or the sheer, dumb size of the institutions. Another phrase of financial usage familiar everywhere now is “too big to fail.” But if something is too big to fail, isn’t it . . . too big?

Look in any direction and what you see are institutions that are Too Big. Too big to fully understand, and thus too big to manage efficiently. Faced with Godzilla-sized problems, logic flees: If they’re too big to fail, the solution is . . . make them bigger!

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