Advice to Obama: Antitrust

02Mar09

We have AIG, an insurance company that’s said to be too big to fail.  We have Citigroup and Bank of America, ditto.  We did let Lehman Brothers fail, and there have been recriminations about that decision ever since.  We are shoveling money to the automakers — “only” tens of billions, to be sure, but that did once seem like a hellacious sum.

When companies get too big to fail, they are too big.  It was once understood that big companies frequently gain monopoly or oligopoly powers in their markets, that they frequently misallocate their resources, that they come to resemble undemocratic governments with unchanging, often out-of-touch bureaucrats at the helm.  Inefficient companies that refuse to reform themselves should fail, so that most attentive ones can take their place.

It’s time to rediscover the concept of antitrust — to break up companies before they get too big to fail.  The capitalist market is supposed to be competitive.  Proactive government intervention can keep it that way.

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