Too Big Fails

In the last few years we have been regularly treated with the phrase TOO BIG TO FAIL.

That term was used to describe certain types of financial institutions which, IF they failed, would likely wreak such havoc throughout our economy and the world that they could NOT be allowed to fail.

And, governments would step in and prop them up financially until conditions changed enough for them to proceed again independently under stricter rules.

Now we seem back to business as usual and concerns about size have receded back to their historical invisible corners of consciousness.

Left behind from that intense period of TOO BIG TO FAIL were the questions of why institutions were allowed in the first place to get too big and what could/should have been done to prevent them from getting that big.

The questions then that drew the most attention were more regulations about balance sheet management and regulation, not the many other serious questions of problems with gigantism.

As we look back at the past 100 years there are several amazing examples of TOO BIG FAILS.

The first point to address is lack of nimbleness and inability to adapt to changes in the world around them.

Sears may be example A. In 1900 they were still tiny but they saw the catalogue business and RFD and mass buying of product and rapidly became the largest retailer in the US. After WWII Sears was impregnable. Then Sam Walton came along with Walmart seeing opportunity in small town America enabled by brilliant inventory and logistical management and low prices. Today Sears is all but dead selling itself off piece by piece. And, now Amazon is out there knocking on Walmart doors saying, “let your fingers do the walking”.

Example B is IBM. It became the biggest and best computer company in the world. In the late 1970s personal computers were getting started. A young man named Gates was in over his head and early in the 1980s he was prepared to sell his Microsoft to IBM for $50,000,000. IBM declined seeing no future in personal computers and software by itself. WOW? Most likely if IBM had acquired Microsoft, the Microsoft story we know would never have happened. But Apple would have.

And, then came Google with a fantastic search tool but no obvious way to monetize it. That all changed and now Google is the biggest innovator in its field. But, they too got blindsided by social media.

In financial services similar problems occurred. AIG got too big for its britches and Merrill Lynch did the same. Some money managers — Fidelity — got so big they could barely buy or sell without distorting the markets they were in. Those problems are ongoing.

Similar things happened in the steel and auto industries. We all are generally familiar with the causes and consequences of those problems.

The second point to address is what if anything either the private sector or government could or should do to dampen the effects of gigantism.

Teddy Roosevelt 100 years ago more or less attacked the problem based on the underlying issues of illegal restraint of trade. Size was obviously an issue as well. Today antitrust issues are a lot less relevant in this arena for several reasons–political as well as economic. Doctrine today disbelieves in government playing any role of consequence in managing issues relating to size of private enterprise.

That said there is growing evidence as indicated above that strongly suggests there are serious questions about the impact of size of enterprises on the progression of innovation and progress in society.

The simplest way to deal with TOO BIG TO FAIL is to start by understanding that TOO BIG FAILS in and by itself.

That suggests to me that we should begin to seriously address how to deal with just plain and simple TOO BIG!



Have you ever read something in a newspaper or magazine about something which you happened to have firsthand knowledge of and realized that what was reported ranged  from distorted to just plain wrong?

Then, have you shrugged with annoyance and simply turned the page and resumed reading about unfamiliar subjects and believed every word?

If you have not had similar experiences, you are probably someone who does not believe anything in the news. If that’s the case, perhaps you do not care and in a perverse sense you are lucky.  But, you will be depriving yourself of interesting and important stuff.

In the law there is something called the ‘best evidence rule’ which requires a party in litigation to put forward the best evidence available. In life at large the best evidence of news etc. has come to mean well edited newspapers and other modern media.

Being a ‘curious George’ deep down, I am always open to and seeking  new ideas, which I guess is the reason why suckers like me  turn the page and go on believing even after experiencing disappointment in the quality of what I have just read on the previous page based on my own knowledge.

In such cases the suckers among us face a serious dilemma. Either we have  to become ‘ doubting Thomas’’ and thus be deprived of a lot of genuine news, or, we have to grin and bear it and simply hope for the best and accept that not everything we have ‘learned’ is fully reliable.

What options do we and the news sources have to address this dilemma?

One option might be for news sources—without compromising their sources—to reveal more about the basis for what they report.

For example, if there is a report about a resignation of an official, it would help to know if the sources included both sides of the story.

Surprisingly, to beat the competition, frequently breaking news simply parrots a news release. And, then the back story [if there is one] rarely catches up. It would be helpful if a publishers’ standard could be established.  Perhaps such a thing exists but it is invisible or simply hard to enforce. At least, they should say if they have not YET heard from both sides in the matter?

Another option would be for curious folks like me to teach ourselves to be more discriminating.

A third option would be to REQUIRE all news sources to make timely space available to any significant persons effected by the news to present their version of the stories—not just corrections but a different perspective.

News geniuses will most likely say these ideas are impossible, denigrate the reputations of the news intermediaries and even violate First Amendment rights. That being said, there is a good case to be made that such ideas would improve the right to free speech of parties whose speech is often muffled by the monopoly power of news purveyors.

For example, a long time ago I was contacted as a confirming source for a sensitive charge against a prominent politician after business hours by a reporter from the New York Times.

Before I was fully alert to what he was seeking, I vaguely remembered about what he wanted confirmed, and stupidly said I thought he might be right.  Then I told him that since I did not have access until the next morning to the files which would confirm or refute, I would call him back then and NOT to quote me.

He said my first recollection was good enough for him because he was on deadline. I said that it was not good enough for me and in the strongest terms I demanded that he must wait.

The next morning his story was published below the fold on page one and my files revealed that what I had initially mis-recalled from the distant past was simply wrong. I called him immediately and chastised him. His response was that I had been ‘skinned back’ [an old CIA term for being ‘turned’] by one of the parties to the matter to change the facts. I had spoken to no one!

My name was in his short piece; I was embarrassed and I complained to a managing editor I knew quite well. Not long thereafter the young reporter left the Times. I still see his byline in lesser publications and do not believe anything he writes.

That kind of misreporting I fear happens too frequently. And, the turn the page and believe everything phenomenon continues to plague too many of us, even after we have learned better time and again.

We live in a time when the very future of journalism is at stake—which may account for some bending of rules; it is incumbent on all reporters to make sure they (a) get it right, (b) report both sides, and (c) be transparent about sources and gaps in their knowledge and the facts.

The issue really needs to be addressed by the right people. They know who they are.

They only have to come out of hiding.


Just after 9/11, in a little town not far from Frankfurt, Germany called Rotenkirchen, from where my maternal great grandfather had immigrated in 1848, we were being shown around by the daughter of the town’s very long time Lutheran minister. She mentioned that as a girl right after WWII, she asked her father what had happened to all the Jews who were there before the war. His answer was: “I do not know. They just went away.”

That prompted her to spend much of her life trying to track down those people who “just went away.” Some close German friends from Hanover somehow found her, and asked her to show us the community where my mother’s family roots began, in about 1850.

The Jewish cemetery was well out of town and thus had been spared destruction simply because the SS had never stumbled on it. It was amazing to read on headstones, virtually all still standing, familiar names such as Sondheim and Lehman.

It appeared to have been a Jewish community of educated, striving and upwardly mobile but oppressed people. Many of their descendants did well by their ancestors.

Few people are aware that the number of people who self-identify as Jews in America today is roughly the same as it was in 1900. Given normal patterns of population growth, that number would be much greater today, except for the exceptional assimilation process of Jews into the miasma of America.

A family that I know very well began with two Jewish parents, who had three children.

–One of those children married a non-Jew and they raised their four children in a secular fashion.

–One of those four children married a non-Jew and they raised their three children also in a secular way.

— And one of those children also married a non-Jew who has two children. One of those children – who is, of course, 1/8 part Jew — currently goes to a Synagogue day care school where she, at age 3 has become very aware and interested in the reasons for Jewish holidays. Told that her great grandfather is 100 percent Jewish, she insisted on seeing him on the VERY next holiday so she could tell him what she knows.

Is that little girl part of a cutting edge renaissance for Jews everywhere?

One of her great uncles, who attended a Catholic school years before, went to the Bar Mitzvah of another cousin – who was half Jewish with a Catholic name, because his father was a Spanish Catholic. The cousin with the Catholic name had met a rabbi who introduced him to Judaism and the structure of religion.

At the Bar Mitzvah of the Catholic cousin, the boy from the Catholic school crossed himself, as he had been duly taught when the rabbi said “Amen,” The presiding rabbi visibly went into shock!

These pictures of scrambled religions and customs is another piece of evidence that may help partly explain “where they all went” after the holocaust and after changes that followed WWII.

The staying power of religion and beliefs transcends lots of secular developments and pressures. Those underlying truths are sharply illuminated in the glowing innocence of three-year-old minds.

The young people of today truly cannot comprehend what caused the WWII Holocaust because the rise of interpersonal religious tolerance may be driving out many forms of historical prejudice.

Perhaps we may begin to see even more tolerance in coming generations of political thought built on a new era of religious tolerance?