Hostage-Taking
Posted on September 23rd, 2008
by Daniel Larison |
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What people mean by the now dreaded phrase “too big to fail” is that large firms hold the people hostage and demand public support when they are in distress using the rhetoric of bombers whose explosives have dead man’s switches: if we go down, we take the hostages with us. What the government is doing right now is colluding in blackmailing the public for the benefit of the most egregious, failed risk-takers. With or without an equity share in the institutions whose debts the government takes on, this is really not much more than serving the interests of a relative few at the expense of the many.
Filed under: politics
It is extremely hazardous to allow a ‘too-big-to-fail’ entity to exist, since any problem the entity runs into can be used to justify extortion of the taxpayer. The entity knows that, and hence it can take insane risks.
Too big to fail should mean too big to exist.
The sad thing is the government is combining failed institutions into even bigger entities to try to salvage things. What they should be doing is breaking them up.
‘this is really not much more than serving the interests of a relative few at the expense of the many. ‘
Isn’t that supply side economics in a nutshell? Isn’t it conservative economic policy that government exists to serve the (nobles) wealthy?
I think it needs to be pointed out that conservatives were on the side of the king back in the late 1700’s, power to the people is not what they are about.
“Too big to fail should mean too big to exist.”
I’m inclined to agree with this. But I think the generation of such entities would be impossible in a free marketplace, sans government privileges, subsidies and competition-squashing regulation.
But just wait until all the current Big Boys get finished scarfing up the more vulnerable small to mid-size firms at fire sale prices.
Talk about ‘too-big-to-fail”.
Is it just me, or do we seem to be shifting more and more towards neo-feudalism every time we have one of the boom-bust-consolidate-inflate cycles?