Scale & Efficiency versus Diversity & Safety

There is a certain battle that has long been waged, with the participants of scale and efficiency on one side, and diversity and safety on another. With regards to the size of countries, trade blocs, companies, or other administrative bodies, a larger size allows for increased scale and efficiency of the economic participants; but only up to a point.

To ensure adequate scale is achieved, without risking the loss of economic or cultural diversity, a measure of unity should be obtained between countries or regions that are already culturally and economically similar. In many cases this would mean neighbours (e.g., Russia and Central Asian countries), but in other cases this might be places with a shared history and language, such as the UK, Canada, Australia, and some of the Caribbean nations. Some nations may be already be large or populated enough to stand alone and still have the advantages of both scale and security, while smaller nations have a multitude of other considerations. Yet some small nations, such as Singapore, do manage to retain a degree of economic diversity and [not coincidentally] utilize some principles of the New Physiocracy. Innovation is required when trying to achieve this desired balance.

Within countries themselves, regional cultures and lifestyles must be preserved, but within the context of national unity. This might require national, in addition to regional branding. Multiregional countries must be defined and branded as an amalgamation of these regions, granting them autonomy but not independence. Maintaining the balance between scale and diversity might require abolishing provinces and municipalities, in favour of governing units inside countries that are sized somewhere in between the two. This would also abolish a layer of bureaucracy and increase the advantages of scale for cities and towns, yet allow for more policy experimentation and innovation by these governing units. It would also weaken breakaway regions’ drives for independence through statehood, by creating greater rifts and discourse within them.

The most pressing economic issues of the past decade within this debate on scale have been with regards to national and global financial systems. The question must be asked about when the advantages of scale are outweighed by an institution becoming too big to fail. While large financial institutions may have more stability within themselves due to a greater range of assets, they also create a system being supported atop fewer and fewer pillars. While positive data might point to short-term stability, unexpected shock would cause systemic collapse. Furthermore, lack of competition in the financial sector limits selection and raises costs for startup funding, while large institutions show disinterest in small business, creating opportunity for oligopolies to arise in other economic sectors too. Financial regulatory agencies must include a mandate to limit size beyond the point of scale advantages, aided by a complete separation of commercial and investment banking and restrictions on [domestic and foreign] takeovers in the financial sector. Similar issues can also occur in other economic spheres, creating towns reliant on single companies, lack of choice for both consumers and labor, and reduced purchasing power. With the COT parliamentary chamber mandated with streamlining regulation and eradicating corruption, these goals are completely institutionalized, and the opportunities for patronage and monopolistic behavior can be purged. By granting startups a permanent voice and entrenching their interests in the system (in the case of the Startup Bank), a constant stream of new competition and innovation can finally emerge and flourish.