Our institutions, be they government or business, seem enamored with a certain variety of bigness. The idea is give tax breaks to the rich, they’ll invest their money, grow the economy, people will be employed and everone will be happy.
This simple picture fails to take into account one problem: the rich are not always good investors. Indiscrimate tax cuts give large amounts for speculators that create burst bubblings that send the economy sinking. More money to rich speculators means more instability that is not conducive to employment.
In the dialogue about the bailouts I agreed with the assessment that the poor performing banks were too big to fail. I felt for practical reasons they’d have to be propped up. But the whole point of capitalism (from a classical standpoint) is that no entity should be too big to fail. Smaller banks engaged in perpetually poor decisions would have tanked quicker and brought attention to our economy’s structural problems much sooner.
The banks weren’t broken up, but merged to get bigger. Banks have a problem when scaling up: the bigger they get, the less local information they can use to determine if a smaller loan is worth the risk. Thus they must stick with larger customers.
2/3 of all new jobs are created by small (less than 100 employees) businesses. This alone should create some effort to get money into local lenders. But I also think local solutions are going to be the majority of solutions regarding our energy problems/climate change problems. Government can spend long sessions deciding to up car mileage standards from 25 to 28 or three people who would drive separately to work can commute in a 20 mpg car.
Reduction and recycling of waste, alternative transportation, home gardening/food storage are all sectors that I think will take off once people understand the savings involved. Those kind of businesses aren’t going to be started by the corporations who are sitting on fat stacks of cash they don’t know what to do with. Many big businesses have stopped investing. They don’t need any more money. It’s time to start giving money back to the people who best know how to use it.