The Wall Street Journal-20080130-The Higher the Throne- The Farther from Reality

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The Higher the Throne, The Farther from Reality

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The Journal's Jan. 16 editorial, "Too Big to Succeed?," says: "Over the years, Citi's size has not so much provided stability as a place for problems to hide." The editorial suggests that Citigroup's new CEO, Vikram Pandit, take a dispassionate view of whether Citigroup has become too big to succeed.

In trying to understand the reasons those problems were able to hide, and the difficulty of Mr. Pandit's task, consider the insight of Kenneth E. Boulding, the president of the American Economic Association in 1968, addressing that organization: "There is a great deal of evidence that almost all organizational structures tend to produce false images in the decision maker, and that the larger and more authoritarian the organization, the better the chance its top decision makers will be operating in purely imaginary worlds. This perhaps is the most fundamental reason for supposing that there are ultimately diminishing returns to scale."

Arnie Celnicker

Arlington, Va.