Size Is A Big Deal

I called a RELATIVE to solicit input…how pathetic is THAT? Like a gangly 13-year-old asking his MOM whether he looks alright.

“Excellent ideas…try to stay focused.”

Excellent idea…there’s the rub.

If anyone IS following along (for one thing, I ought to mention that I mean eventually to hit you up for money…think publicly funded internet to complement publicly funded radio), between Planes, Trains & Automobiles, I am writing my way toward an argument in favor of larger numbers of smaller competitors, also a profound reallocation of American Labor.

Do NOT mistake that for drooling over the quote-unquote Small Business Owner that the Republican party tromps out for special legislative consideration just as predictably as the Democratic party tromps out the Needy and Underprivileged. I contend that, all the clucking of concern notwithstanding, both classes are purposefully maintained near the unnerving precipice of insolvency.

Scrimping by from paycheck to paycheck is bondage. We have among us those who would subject the broad masses to exactly that, for the whole of bleak and thankless lives, while they themselves live like Saudi Princes. It ain’t right, and I think we should do somethin’ about it.

Previously, I posited that we are experiencing not so much a Credit Crisis as a Confidence Crisis. I was horrified to learn how many American companies don’t have their next payroll banked. Horrified. Does not a few months sound like reasonable prudence? What if there is another Katrina, what if there is another Northridge earthquake, what if there is another 9/11, what if there are two Incidents at once?

What kind of security do even the Employed have if, God forbid anything unusual happens, their bosses might not be able to cover their very next paychecks? Imagine the pandemonium if multiple companies suddenly couldn’t make payroll.  Gambling with a man’s wages has got to be a benchmark for recklessness.

WE CAN’T LET THEM FA-A-AIL is the cry-baby wail. To quote Cher in Moonstruck, SNAP OUT OF IT. To quote another Super Star, YES WE CAN.

I suspect that a lot of the protectionist crapola comes from the shoulder strap/air bag/helmet crowd. Tuckers. Once the training wheels come off, there is a point at which you either take your hand off the bicycle seat, and allow the spills from which skills are born, or you buffer/coddle/protect/insulate/orchestrate/manipulate the “rider” forever.

I hasten to add that I am ALL for generalized advancement in Health, Education, Safety, Welfare and Security. Without those things, what exactly does Civilization have? Cars? I do NOT take displacement of Labor lightly. I do not address Unemployment last because it is least important. On the contrary. Without people, what does any of it mean?

But my preference for failure of untenable enterprises, my opposition to mega mergers and my advocacy of redistribution of Labor are all steeped in the concept of Optimal Size.

I have been at this not-making-money and not-saving-the-world thing for so long, I can dust off “old” pieces rather than reinvent the wheel. I’m not sure whether to be grateful, or weep.

 
SIZE MATTERS
3 August 2008

I can’t remember what was the right number of times to read The Right Number of Elephants to my son when he was little, but it was a big number. Counting down, the Right Number of Elephants was X if you were doing Y, and Z if you were doing something else…two, for example, was the right number of elephants if you needed tireless jump rope twirlers…until, finally, one was the right number if you needed a friend. Sweet.

In Alcoholics Anonymous literature and throughout the recovery circuit, there features the concept of being right sized…a worker among workers, a family member among family members…rather than requiring disproportionate care or commandeering disproportionate attention.

American Politicos, and consequently a parade of legislation heralding a festival of advantages, continually address Small Businesses. Constantly, we are chided to think of Children, Families, and Small Businesses.

Why is that?

Why would a single, childless person climbing the corporate ladder want to think of children, families and small businesses? Why SHOULD a single, childless person who is securely ensconced in a long career with a big company be obliged to specially consider children, families and small businesses?

Children are defenseless, you say? That is why children have parents to look out for them. And THAT is why it is not only ridiculous but dangerous to pressure people to have kids they don’t want and won’t cherish. People don’t take care of things they don’t want, including things that are not things.

Families are sacred, you say? Some are, some aren’t. Same deal with single people. If government will safeguard only families, shall single people team up on paper, to reap the many benefits that fall to Marrieds, while simply going on about their lives as Singles?

But then what of gender lopsidedness? I heard it reported on radio that there are now 53 MILLION single women in America who, if history bears out, rather exceed the number of single men. If government will safeguard only families, do we mean to legalize polygamy, or do we mean to export single women to China or do we mean to add single men to our Chinese imports?

Small business is the stuff of the American Dream, you say? As American as baseball and apple pie? There is a time for every season under Heaven, including baseball season…and man does not live by apple pie alone.

Heretical as it may seem, I submit that the days of the quintessential Mom & Pop small business are largely over. However efficient a particularly well-run small business is, it is inefficient given the scope of the market. The “normal” course of commerce will routinely oblige a small business to charge higher prices, and will just as routinely prevent a small business from carrying wide selection or deep inventory. A small business has no economies of scale.

But gigantic retailers and service providers, as surely as Big Government, are bedeviled by bureaucratic bullshit. When an enterprise gets big enough, without fail, the left hand will cease to know what the right hand is doing…at a certain size, the left hand can’t even GLIMPSE the right hand in order to GUESS what it’s doing. Whereas a small operation has no economies of scale, behemoths have diminishing marginal returns. Further, and worse, at a certain size…notably the monopoly/oligopoly size…there is an absence of competition that simultaneously exacerbates inefficiency and eliminates moderation of price.

Just as soundest governance plays to the middle rather than the fringes, I submit that soundest business practice is found neither in small businesses nor in gigantic corporations but, rather, in mid-sized companies. TODAY. One night’s dream is another morning’s oversleeping.

Today, I sense that the lip service paid to the Small Businessman is to keep alive the fantasy that Ordinary Americans can bust into the glamorous high-flying Elite, when “conditions on the ground” say that the overwhelming majority of us will toil thanklessly, longer than ever, then die in relative poverty and total obscurity.

There was an expression that I suspect has become Politically Incorrect…too many chiefs and not enough Indians. Very well…too many chefs and not enough diners, too many owners and not enough customers, too many people being their own boss and not enough taxpayers to give them the relief they need to continue being their own boss.

Speaking of the agility, adaptability, flexibility, efficiency and price competitiveness of mid-sized companies, look to the oil, automotive and telecommunication industries for assurance that the proposed airline merger will well line the pockets of the few while it ill serves the needs of the many.