The expression "small is beautiful" is well known from a book of that tile written by economist E.F.Schumacher. A friend has just sent me a link to this blog post which shows how the converse is also true, that Large, in the sense of complex, is also Ugly, for the simple reason that we all intuitively know, that the more complex something is the more difficult it is to put right when it goes wrong.
Sadly, it is unlikely that the manifest failures of the system of contracts model over the last decades are going to be destructive of this particular myth any time soon, although the news of the insourcing of the B-21 at the end of the post offers a glimmer of hope.
Saturday 8 October 2022
Economic Myths: there's nothing wrong with complexity
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3 comments:
He gives four examples at the start. These are things financed, regulated, tolerated or protected by the state.
There are many complicated things which work surprisingly well.
It's not that complicated things don't work well, when they work, it's that when they don't, they are the devil to put right. When it comes to economic systems, you are dealing with human beings, so the chances of failure are always high. "To err is human".
"These are things financed, regulated, tolerated or protected by the state."
AFAICS, that is the point of the article, that complexity and the state are a marriage made in hell. See also Bastiat's example of the food supply of Paris.
FWIW I operate my financial services business exactly on the basis of keeping things as simple as possible and not letting us get involved in any form of 'complex' product etc. For me it was instinctive, but it seems that those instincts were correct.
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