Today's column by Bill Virgin of the Seattle Post-Intelligencer makes an excellent point about the dysfunction in our economy through the experience of a company that isn't dysfunctional: SafeCo Insurance.
SafeCo has been a solidly-performing, profitable corporation (and in the process, saving many of its customers a lot of money) for a long time. Earlier this month, it was swallowed by Liberty Mutual Group, a bigger insurance company. It did not sell out, however, because it was failing, and not that it was a tiny fish getting squashed by mega-market forces: It was the 16th largest insurer in the country. That's not chump change.
Virgin: "Guess who was No. 1 on that same list, with revenues 18 times those of Safeco's? Yup -- American International Group, the insurance company you and I as taxpayers just bailed out. Which gets us to the point about the connection between the Safeco story and the current financial fiasco. AIG was deemed worthy of federal intervention because it had grown so huge, its tendrils attaching it to so many parts of the global economy that allowing it to fail would have pulled down a lot of other walls along with it. Had Safeco been in similar straits, would the other Washington have even noticed, much less roused itself to get involved?"
Virgin's column is headed, "Will we miss the mid-sized companies?" In answer: Yeah, we will, unless we restructure our business environment to make something other than gigantism once again an acceptable business model.
