| One lesson from Citigroup |
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| Written by Tim Worstall | |
| Tuesday, 06 November 2007 | |
Tom Stevenson poses a question :But a wider question arises from Citi's woes. It goes to the heart of our relentless pursuit of growth, size and complexity. Is there a point, contrary to the apparently inescapable thrust of global capitalism, when big is no longer better?Well, yes, this is hardly a surprise to anyone now is it? Just as there are economies of scale there are also diseconomies of scale? Actually, unfortunately, it is something of a surprise to many. Have giant corporations like Citi and the similarly challenged BP simply become too big to manage effectively?Leave aside the many countries part and look just at the size of the organisation. 330,000 or so....anyone remember how big IBM was when it almost went bankrupt? Some 400,000 or so. Now I agree that using just a couple of companies like this is a little unfair, extrapolating a bit, but have a look at this list . Barring Walmart (and I'd argue that retail is a little different) none of America's largest companies have more than 500,000 employees. Which leads me to what I've long thought is the most basic problem with the NHS. There's 1.3 million employees in it. We've gone far past the point where we are reaping economies of scale and way into the territory of having diseconomies. While there are other countries with State provided health care, no one does it quite like us. Denmark and Sweden, for example, which both have publically provided systems, do it at the level of the county (as well as being much smaller nations, of course), both raising and spending the money locally. Which leads me to the thought that the biggest problem with the NHS is precisely that it is in fact National.
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