Too big to Fail?

[SamIam]

I really liked the following from the pdf article which followed the original link (emphasis my own):

An unfortunate side effect of the government’s massive aid to TBTF banks has been an erosion of faith in American capitalism. Ordinary workers and consumers who might usually thank capitalism for their higher living standards have seen a perverse side of the system, where they see that normal rules of markets don’t apply to the rich, powerful and well-connected.


Here are some ways TBTF has violated basic tenets of a capitalist system:

Capitalism requires the freedom to succeed and the freedom to fail.
Hard work and good decisions should be rewarded. Perhaps more important, bad decisions should lead to failure—openly and publicly. Economist Allan Meltzer put it this way: “Capitalism without failure is like religion without sin.”

Capitalism requires government to enforce the rule of law. This requires maintaining a level playing field. The privatization of profits and socialization of losses is completely unacceptable. TBTF undermines equal treatment, reinforcing the perception of a system tilted in favor of the rich and powerful.

Capitalism requires businesses and individuals be held accountable
for the consequences of their actions. Accountability is a key ingredient for maintaining public faith in the economic system. The perception—and the reality—is that virtually nobody has been punished or held accountable for their roles in the financial crisis.

The idea that some institutions are TBTF inexorably erodes the foundations of our market-based system of capitalism.

I could not agree more about the importance of accountability and how the lack of it has turned the management of big financial institutions and other major corporations into a free for all.

Communist systems of government suffer from a this same failure of responsibility. If a nationalized business is inefficient and fails to produce, who cares? The government will simply pour increasingly worthless yen (as in the case of China) onto the problem as Government supported banks prop up everything from construction companies that are unable to build a viable national infrastructure to manufacturers turning out contaminated baby formula to corporate polluters who pour so many toxins into the air over Beijing that birds fall dead from the sky.

Capitalist countries are supposed to be better than that. Yeah, right.

It's all a part of the continuum of government sponsored disasters from small to large which seem to be occurring in countries all over the globe. The fat cats get pay raises, stock options, or at worst; golden parachutes - all as a reward for their greed, irresponsibility, and inability to run so much as a lemonade stand, never mind an outfit like Goldman Sachs.

The rest of us are still struggling with high unemployment, low wages if we are lucky enough to still have a job, and a highly uncertain future.

"Too big to fail" is simply Orwellian double-speak, not a viable governmental policy.