Size matters

One of the more interesting things one learns when building scale model aircraft is that not everything scales.  This is not important when building static models but if the model is supposed to fly, the fact that airfoils and tail sections behave differently in the air as the size changes must be taken into account.  There is a subsection of fluid dynamics that covers this phenomenon and the calculations are assigned Reynolds Numbers.  In practice, this means that scale models of high-performance fighter planes barely fly and are nearly uncontrollable unless the control surfaces are roughly 20% larger than mathematical scale.

It turns out that fluid dynamics is hardly the only phenomenon that doesn't scale in a straight line.  This is even more true of social organizations.  Ideas that work magnificently when the group has 20 members usually have problems when the group is 20,000 and are usually unworkable at 20,000,000.  The very notion that there are good ideas that apply to all circumstances is usually proven wrong quite quickly.

One of the main attractions of Populism is that for one of the few times in political thought, folks began to discuss the possibility that there should be different rules for different sized organizations.  Turns out, this is astonishingly obvious once it is understood that economic thinking would do well to have Reynolds Numbers too.



Populism—Size matters
Any society formed by humans eventually has to grapple with the question, “what is private? and what belongs to the group as a whole?”

In spite of historical examples where virtually everything of value is thought to belong to individuals (laissez-faire capitalism) or the whole society (communism) such extreme examples have tended to be unstable because humans instinctively seem to believe that an effective social order must be a mixture of private and public.

The Populists of the late 19th century found themselves in the middle of this dilemma. On one hand, they believed that the owner-operator arrangement in agriculture was not only history’s most efficient, it had been endorsed by Christ himself. On the other hand, they wanted to use government power to regulate big business. Even if these seemly conflicting demands made instinctive sense, it laid the Populists wide open to the charge inconsistency. “If,” asked Populism’s critics, “private ownership and management is such a good idea for farmers, why isn’t it a good idea for Standard Oil?”

The Populist response was to insist that while private ownership by individuals posed few problems, corporations, trusts, cartels, and other artificial combinations were prone to evil. The idea that individual proprietors were virtuous while corporations were naturally evil may have satisfied some of Populism’s supporters, and to some extent this formulation is still repeated today, but in truth, it explains little and adds virtually nothing to the larger private/public debate.

What 100 years has taught us

Here is the problem that is exposed when a Lefty starts labeling everything he or she doesn’t like as “corporate.” There are over a quarter million corporations in USA, so generalizing too much about so many actors is impossible.

And some corporations are formed for perfectly splendid reasons. I know a guy who founded a successful company that made institutional furniture. As he got close to retirement age, it became perfectly obvious that none of his offspring were going to want to run his business--not enough status. So he decided he would sell his company to the employees and spend his old age giving the money to his favorite causes. The ONLY way he could have pulled off that maneuver was to incorporate.

Then there are lefties who just get their facts wrong. I once was talking to someone who described butter maker Land o’ Lakes as “too corporate.” That’s odd, I mused, because they are a producer’s cooperative that was once so admired that Minnesota’s Farmer-Labor governor called for the state to become a “cooperative commonwealth” during the depths of the Great Depression. “Oh you know what I mean,” says she. But the truth is, I have NO idea what someone means when they describe something as “too corporate.”

So if organizational types don’t explain the problems of modern capitalism, What does? IMO, the obvious answer is SIZE! Small organizations have a limited ability to cause damage. Large organizations, by contrast, can impact the lives of millions.

For example, virtually all businesses of any size require a reliable supply of electricity at affordable prices just to open their doors. How the small stationary shop in the mini mall runs its business is a pretty minor affair. How the power company in the area performs not only affects the stationary store, but all the other shops, industries, and customers as well.

The Populists and Progressives only vaguely understood the importance of size when inventing modern industrial capitalism. Yet sometimes they legislated magnificently. IMO, we as a nation are just beginning to understand how good the rules were that governed financial institutions and large industries like electrical generation.

But as yet, I have not discovered evidence that our grandparents understood--theoretically--that THE important variable was size. The closest example I have discovered was when John Kenneth Galbraith wrote that he had discovered in his role as head of the Office of Price Stability during World War II that the only prices he could fix were prices that were already being fixed.

In fact, it took until 1980 before the pure problems of size were addressed systematically in a book called Human Scale by Kirkpatrick Sale. This book is a work of genius for it explains through myriad examples how MANY problems are caused when things get too big.

Unfortunately, Sale and his many acolytes seem to forget that there is also problems when things are too small. Chinese Communist Mao Zedong had the wild idea that every village should be able to make steel. The resulting fiasco should have disproved a great deal of flawed lefty thinking. The “Small is Beautiful” crowd has actually formed an institute to develop more “human-scale” technology and have discovered that designing successful products according to political dogma is damn near impossible.

Size and regulation

One of society’s primary roles is the regulation of human behavior--what rules must everyone accept to become a member of the group. Americans certainly don’t like the rule-making crowd very much. With good reason. When I was a city-planning intern, I got to comb through the city ordinances for rules that could be eliminated. My favorite was a law against animals having sex outdoors.

Yet the evidence is in. Sound, logical, well-written rules are NECESSARY for the successful operation of a science-based society. For example, the automobile culture in the USA is simply not possible without a set of widely agreed upon and enforced rules. Yes the rules are a hassle and enforcement is mostly absurd, but because everyone agrees to travel in more or less the same speed and direction, today’s freedom to move about is beyond that of kings 200 years ago.

Some would have us believe that rules stifle creativity. Well yes they can. Yet good rules can also stimulate incredible creativity. A fairly fat rulebook in football hasn’t eliminated the 500 page playbook. The narrow rules of the fugue certainly didn’t keep JS Bach from composing masterpieces.

1 + 1 =2

If the obvious need for great rules is combined with the equally obvious idea that large organization affect more people than small ones, you get a mind-bogglingly obvious political principle:

Because societies are by necessity involved with the regulation of human behavior, it is clear that the regulation is MOST needed by LARGE organizations.

Let us be clear what this means. It means that governments are necessary to regulate the behavior of electrical companies, not the sexual behavior or drug intake of their citizens.

Size matters when it come to regulation. There is NO inconsistency between folks complaining about government intrusion and also wanting their governments to pass regulations that keep coal-fired electrical generation smokestacks from also producing acid rain. more