Saturday, March 21, 2009

Rethinking Capitalism

A recent discussion with a long time friend of mine brought up the subject of companies being too big to fail. It seems a lot of the current troubles would have been smaller problems if the entities involved were smaller concerns. Why does a bank have to be so big? Would Bank of America be better of if they were not a such a huge monolithic organization? Would CitiGroup? How about GM and Chrysler. What economies of scale have we actually benefited from in this respect.

A long time ago the government broke up AT&T into the baby bells. Perhaps this is a case of where we need the same kind of thinking. Perhaps even smaller companies. How about Microsoft? They have spent years in court trying to remain a monopoly. Why? Would not the company be better off as multiple smaller companies, increasing competition and reducing the likelihood of some mono cultural problem affecting the entire stack of products.

I think this same idea can be applied to all companies in the US. Then it is also appropriate to consider the same thing for individuals. Can individual wealth and influence be allowed to grow with out any checks and balances? Does the accumulation of extraordinary wealth indicate undue influence or control? Does that not lead to opportunities for abuse?

Too big to fail means they are too big.

No comments:

Post a Comment