Too-big-to-fail is a paradox in the capitalist system. If institutions are too big to fail, and the state must periodically step in to salvage them, then we seem to have punctuated free markets; that is, free markets now and then punctuated or interrupted with periods of socialism. Punctuated socialism so far rewards those who will not manage risk, and punishes those who do, as well as people who pay taxes and save money. It is, in its essence, the story of the Grasshopper and the Ants. Only, now the industrious ants will collectively be taxed and forced to further exertions - probably in the middle of an economic "winter"; i.e., recession - in order that the too-big-to-fail Grasshopper be preserved.
--
A Reprint from 2008.
I really do not understand the ideas of Capitalism and Socialism well enough to understand the phenomenon of too-big-to-fail. Anything that is actually Too-Big-To-Fail seems to be a contradiction in a Free Market system.
Too-Big-To-Fail implies control of the market, either in act or in failure to act... TBTF is a contradiction in a free market. Therefore, it we have TBTFs, we do not have a free market.
Nothing new here.
--
--
A Reprint from 2008.
I really do not understand the ideas of Capitalism and Socialism well enough to understand the phenomenon of too-big-to-fail. Anything that is actually Too-Big-To-Fail seems to be a contradiction in a Free Market system.
Too-Big-To-Fail implies control of the market, either in act or in failure to act... TBTF is a contradiction in a free market. Therefore, it we have TBTFs, we do not have a free market.
Nothing new here.
--
Posts
4 comments:
One meaning that I would attach to "Too-Big-To-Fail" is this one:
If that thing or system fails, we, the people who are in power, we "Shall-be-Swept-Away."
The worry isn't about the Thing. It is about the consequences to the Scoundrels.
I am in agreement with you. Of course, the system failed much earlier, as early as the time when the too-big-to-fail institutions appeared on the scene.
Probably failure also occurred when we began to believe that we ourselves were too-big-to-fail, too-important-to-fail, too-great...
Everything has seasons under the sun, and we should have plans for the winter; we should not deny that winter could come.
Like you I don't understand it. Something like everything being so bollixed up together that the failure of one part is the failure of all. But in a large sense, hasn't this always been the case? Exhibit A: wars (or poisoned cantaloupes or global warming or epidemics, etc.) It's really never been a free market system. What these clowns mean by the term is "free for me and fuck you." (Sorry for slipping into the vernacular there.)
Exactly.
The whole business of the Tea Party senators writing a bill to exempt gold and silver from capital gains is yet another way to (1) enrich the rich, and (2) drain revenues out of government, and (3) reward speculation in commodities, particularly speculation on margin which is deleterious for commodities we can eat.
Post a Comment