Wednesday, March 18, 2009

Too Big to Fail

Apparently some companies are "Too big to Fail", whatever that means. Apparently it means that the company is so large/employs so many people that it would be a disaster to the entire nation were the company to go under. Thus, "Too big to Fail"

Dr. Jerry E Pournelle has been bandying about a thesis for several months now. Now Jerry is a old school conservative, not a Libertarian, and is thus prone to solutions that are pragmatic. Us libertarians are naturally someone suspicious of pragmatic solutions to problems. We tend towards principled solutions and damn the consequences as it were.

They're Failing.
Let them Fail. (To paraphrase James T Kirk)

Pournelle's postulate is a simple one. No one is "Too big to Fail". If somehow you are TBTF, then you are "too big not to break up", using the various anti-trust acts.

One one hand, I have to admit it is appealing, though it does seem to go against all Libertarian principles.

On the other hand, there is a vague threat, never spoken out loud of course, that goes something along the lines of "Nice little economy you have here. Be a shame if something happened to it."

Well, if there is one thing that Libertarians and Conservatives should be able to agree on it is this: We do NOT negotiate with terrorists. Ever. Period, Dot, End of Story.

So certainly the "Too big to Fail" = "Big enough to break up" postulate is an appealing one. But a Libertarian instantly cringes at the thought, or does he?

The truth is Libertarians or Objectivists don't really like or trust corporations any more than they do the government. Oh certainly corporations haven't killed 200,000,000 of their own people over the last hundred years as governments have, but they do share one feature of government that Libertarians absolutely despise.

They are a way of abrogating individual responsibility to the collective.

Our heroes have names like "Rearden Steel" or Taggart Transcontinental, not ABC Holdings company Limited.

And that's the problem with these giant alphabet soup companies like AIG. There is nobody home. No one to say, this is my company, my problem, my responsibility. Instead responsibility is abrogated to the collective, and if everyone is responsible then, as we well know, nobody is responsible. And if no one is home, no one is harmed by breaking the company up either.

Yeah, it's pragmatic. Pragmatic at a Hobbesian level even. But I can live with that.

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