Double plus ungood

There has lately been added to the lexicon a phrase which defies justification: “too big to fail”. The claim is that there exist companies whose impact is so broad and thoroughly integrated into the fabric of our economy that failure of such a magnitude would be unsustainable. The argument is no less specious than those which defend government itself. Not that I am an anarchist by nature, but I do think that government is overrated and, were ours to collapse, people would find a way to survive without it.

As for these companies that supposedly must be saved I say: follow the money. Sure the politicians will tell us that the loss of jobs, the collapse of financial markets and the gap in services will be too great, but what they mean by these things are the loss of government jobs, the collapse of financial support for their next campaign and the gap of services they will be unable to parade before the electorate. Creating the illusion that certain companies are so critical that government intervention is necessary to keep them afloat is akin to claiming that the collapse of McDonald’s will bring starvation.

While many people would be suffering had GM gone into bankruptcy protection, those people would be the unionists forced to renegotiate contracts that would make GM more competitive rather than the taxpayers who have yet to gain a dime from being forced into an unneeded rescue. The bailout of companies like AIG speaks more to the origin of political fund raising than it does to the need to persist financial institutions which practice flawed policies. Compounding these actions is the fact that it is the self-same elected officials who, having passed ill-conceived legislation, created many of the risk pitfalls into which these companies fell.

Additionally, and perhaps most importantly, creating a culture in which companies believe that they will be saved from demise should they fail means creating one where the natural influence of risk is removed and decisions are made with less regard for their downside. The government already enjoys such a cushion from failure and now, thanks to the misguided actions of our politicians, so does big business.