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Trevor Stone's Journal
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Shower Thought: Too Big To Fail 
1st-Mar-2009 01:20 am
Om Chomsky
The phrase "too big to fail" was bandied about a lot last fall as people with a fair understanding of how the national and world economy works (worked?) worried about the collapse of major banks. I got to thinking: "Who else is too big to fail?" and the first example to come to mind is public utility companies. I'm sure the government would step in if the phone or power company was in precipitous danger of running out of money to provide service.

Free marketers typically oppose strong regulation, even in the face of catastrophic failure, on the grounds that it may hamper innovation and evolution, and I see their point to an extent. Other folks point out that if taxpayers are going to keep your company afloat, the taxpayers should be assured you act in the public interest. So how about this compromise:

If you want to claim you're too big to fail, you need to play by public utility rules and accept regulations that guard against you failing. If you don't like the regulations, split yourself up until the pieces are small enough that they can fail.
2nd-Mar-2009 05:17 pm (UTC)
Somehow I can't help thinking that corporations naturally want to merge into larger things. The image in my head is Terminator 2 reforming while I am thinking about AT&T over the last 25 years.
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