We know about economies of scale from Adam Smith and the famous pin factory.  As you make more of something the per unit cost goes down.

But when an organization get past the optimum size dis-economies of scale start to set in.  Airlines are an obvious example.  American, Delta and United are more expensive and give worse service than Southwest.  Here is a link to an article about Dis-economies of Scale.  In case you want to see if I’m making this up.

Government is another area were we might be seeing dis-economies of scale.  I was reminded of this when I wrote a recent piece about Costa Rican Entrepreneurs.

The US used to be subdivided into 50 states that had a lot of autonomy.  Now more and more of what goes on is dictated by Washington.  It is big and cumbersome.  And even if it has the best of intentions it is too large to be nimble.  Countries like Costa Rica and Singapore are smaller and faster with less bureaucracy.  They may have a competitive advantage in the world for the next few generations.