Tuesday, August 26, 2008

Too Big To Fail: A Fanciful Cover Story for Political Cowardice and Governmental Ineptitude

Hardly a week goes by now without our hearing about the need for a government bailout of some business that is said to be "too big to fail."

The argument is that the enterprise teetering on the brink of bankruptcy is so large that our entire economy would be severely damaged if we just let the failing business go down the drain without throwing a hefty lifeline of taxpayer dollars to it.

We're soon going to be hearing a lot about the "need" for the U.S. Treasury to rescue the nation's former "big three" auto makers (and K.R. will have more to say about that balderdash in the coming days).

The fact of the matter is that a free market economy must necessarily include the freedom to fail as a consequence of poor decisions and corrective punishment for imprudent business and financial practices.

No business should be permitted to become too big to be subject to that discipline of free enterprise. Instead of bailing out such pitiful helpless giants, we should restrict or reverse their growth and, if necessary, split them up.

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