I’ve been giving some thought lately to the idea that some corporations are “too big to fail.” It feels terribly wrong at the gut level, perhaps because America was originally envisioned as a place where people could fail and not wind up in some endless hell of debtor’s prison or servitude. We tend to forget that the right to get a second chance through options such a bankruptcy were a pretty big deal to the early patriots who brought the United States into being.
But now we have institutions that cannot be allowed to go the way of failed ventured when they, well… fail.
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It strikes me that accepting this is a very dangerous thing. Consider that one defining power of any sovereign state is a monopoly on the use of lethal force. In other words, they retain to themselves the option to kill those who are a threat or perceived as such. Even countries that have renounced the death penalty have some kind of military or even a police force that has the option to apply this ultimate sanction.
Theoretically, this should also apply to corporations or any other organization that presents an existential threat to the state. Obviously we are not talking about killing the organization’s members literally, but dismantling the organization or at least stopping it from doing whatever it does that creates harm. But if an organization like, say, an investment firm or credit company that almost single-handedly pulls the national and much of the global economy into near-chaos, and that organization is deemed “too big to fail” is it also too big to shut down, if only temporarily? Even when every reasonable legal and moral tenet says you should?
Does “too big to fail” mean that companies like Goldman-Sachs, J. P. Morgan, Citicorp, Fannie Mae and all the rest are in fact powers unto themselves, independent of the US government? If they are too big to fail, are they too big to regulate? Are they too big to hold accountable?
For these and other reasons I believe that “too big to fail” very likely means “too big to exist.”