Now that Wall Street has (not) gone out of its way, once again, to demonstrate the weaknesses of unregulated capitalism, let's take a moment and reflect on what we know.
Capitalism is cyclical. Even if there is a general trend in one direction, what goes up must come down.
Despite their alleged expertise, Wall Street types operate on a herd mentality: If X-Bank is doing Y, then Z-Bank must do it too, just to keep up and keep their customers happy.
It is very expensive to fix a broken system.
It's more expensive to fix a bigger broken system.
Herd mentalities produce bigger systems.
More trite wisdom after the jump.
Like steel, economies are stronger if they contain many separate layers, therefore flaws are isolated and don't affect the whole system.
Consolidating layers of an economy, and industries, allows flaws and weaknesses to spread faster and farther.
Just because a system is complex, doesn't mean the experts understand it better than you.
Just because they're experts doesn't mean they're right.
Private industry doesn't necessarily do things any better than the government.
The two primary motivations on Wall Street are FEAR and GREED. Neither is a healthy, or rational, basis for an allegedly self-regulating system. Greed overextends. Fear overly consolidates.
The strategy of the last three republican adminstrations has been to privatize gain and socialize loss.
Wall Street DOES believe in socialism.
Even the biggest businesses can fail.
Big enough business failures can take down the world economy.
So,
IF we know that economies are cyclical and businesses are going to fail; and
IF we know that allowing companies to grow too big causes otherwise isolated problems to reach across industries and economic sectors, and
IF we know that big business failures will upset our daily existence, and
IF we know that Wall Street isn't going to keep its own institutions from failing,
THEN, there comes a point at which companies should be kept from growing, or dismemebered in an orderly fashion, because their existence represents too great a threat to our economy.
Sure, there are some things that smaller companies can't do that larger companies can--like spreading large amounts of risk over international markets. The question, of course, is should we be doing them?