As an involuntary shareholder of AIG, I’ve been a tad resentful of the notion of some corporation or other being “too big to fail.” It seems to me that if any corporation gets so big that the taxpayers must bail it out for the good of the greater economy, then that corporation has grown too damn big and the government — yes, the government — should step in and break it up.
Right now, antitrust law seems to be based on an assessment of market share … and the political whims of whichever administration is in power. Reasonable people can disagree on how much market share one corporation needs to win before the good of the public and the economy dictates that government step in. But reasonable people also can agree that if a company poses a risk to taxpayers if it goes bad, then we need to eliminate that risk.
How do we do that? I’m no economic expert, but the only way I can see to do it is by government’s altering such companies in ways that would let them fail, if fail they must, without cost to the taxpayers. (Doing so also would eliminate the moral hazard that comes with the knowledge that a taxpayer-funded bailout might be available, perhaps thus providing an incentive for companies to be better-run.) But maybe there are other ways to eliminate the risk to taxpayers that I haven’t thought of. Thoughts?
UPDATE: And then there’s this utter screwing of the taxpayers. I want somebody to bring this up the next time somebody starts talking about waste, fraud and abuse in the stimulus program — not that there’s anything wrong with pointing out waste, fraud and abuse in that program, but some people only seem to focus on w/f/a in certain types of programs: the ones that benefit those other than the rich.