Too Big To Fail: A Call for States’ Rights

In the wake of the 2008 crisis came the realization that our financial system is teetering on the brink, at the mercy of banks that are too big to fail.

A lesson that’s hardly surprising to Software engineers who have known for decades that “God Objects”, entities that are far too widely encompassing, produce intractable and unwieldy outcomes.

And now, in the wake of Donald Trump’s election as President of the United States, perhaps it’s time we admitted the same about our Federal Government.

Due to historical debates around Slavery and Abortion, the rallying cry of States’ Rights has long been the call sign of conservatives. But there’s no reason it has to be. The principles behind this philosophy are intuitive, non-partisan and widely held in a variety of fields.

First, there’s the issue of risk. Putting all your eggs in one basket is almost never a good idea, whether we’re talking about retirement savings or political governance. It creates far too much risk. In a diversified portfolio, the bankruptcy of a few securities can be easily weathered. But not so in a portfolio that’s concentrated in a single stock. In a diversified financial system, a few small banks can go out of business at any time, still leaving behind a financial system that’s robust in the face of random failures. In the financial system of 2008 however, a single Lehman is sufficient to push the economy to the brink of collapse. In a political system that’s decentralized across numerous entities, no one need fear the impact that a single Trump/Clinton can possibly wreck.

Then, there’s the issue of power. Or rather, the effects of having too much of it. Like the old saying goes, Power Corrupts. Few things are better at moderating behavior than the prospect of facing repercussions. A small regional bank may have to treat their customers with respect and reverence, in order to ensure their continued success. But a megabank like Goldman can get away with murder. The President of Switzerland may have to moderate his dealings with other nations, but the President of the USA can build a 3000 mile wall on a whim. Centralizing too much power into a single entity is sure to produce behavior that no God-fearing person would otherwise embark upon.

And finally, and most importantly, personalization. If there’s one thing to be learnt from the past few elections, it is that America is a country divided. The people of Texas are worlds apart from the people of California, and adopting a one-size-fits-all federal government is and always will be a slap in the face to half the country that rejects it.

The people of Texas shouldn’t have to abide by an Obamacare policy that is forced upon them by Californians, and the people of California shouldn’t have to abide by mass-deportation raids or abortion-bans forced upon them by Texans.

For far too long, we have tried to shoehorn people from vast swaths of the continent, into a single federal government. We have tried to force the same set of federal policies down the throats of both rural Montana and urban New York. We have tried to create a forced coexistence that has lead only to acrimonious fights and disputes. Perhaps it’s time we accepted that there are irreconcilable differences between the states. Differences in culture, world-view, economy and political ideals. Differences that defy a single Federal Government administration.

Perhaps it’s time we considered returning to an America envisioned by the founding fathers. One where each State is sovereign to the greatest extent possible. One where the Federal Government is more akin to the European Union in charter and mission. One where States’ Rights allow Californians and Texans to forge their own unique paths, without having to be locked in endless political battles and alternating Presidents that neither find palatable.

Related Links:
Is the United States Too Big to Govern?