“Too Big to Fail”

How often over the last six months have we heard the phrase? Bear Sterns wasn’t, but AIG is. Now the federal government is requesting expanded powers to take over these companies that are deemed by someone as being “too big to fail.” Although this might theoretically be a better option for the taxpayer to have a supposed stake in these companies (by the government owning them instead of bailing out these corporations), the threat to liberty is likely greater. As companies are protected from the consequences of their bad behavior they will continue that manner of practicing business, destroying the economy. As the government sets a precedent of taking over businesses that “need to be protected” from failure, the tendency toward government ownership of the means of production may proceed unmitigated, with concerning fallout.

Economic fascism (as distinguished from its more commonly discussed form: authoritarian fascism) in both Germany and Italy during the 1920’s and 30’s was a precursor to its more evil and obvious cousin. And the more power the government assumes to control and regulate the market, the more it begins looking like the authoritarian version.

The battle between fascism and communism was a battle between whether a few private companies were preserved and protected (i.e. “too big to fail” corporatism), or the “society” owned the businesses (state socialism). These two forms of socialism both require a forceful and oppressive state as they are both against the natural tendency to seek self-interest and strive for freedom to make one’s own choices.

IG Farben is an historical example of the types of businesses that are “too big to fail” (like AIG) and “vital to national interest” (like the auto industry). During the run-up to Germany’s expansionistic and aggressive policies of the early Nazi era, four large companies (among which were BASF and Bayer) were merged to form IG Farben, which was subsequently protected and promoted by the incoming government.

During the years between the two great world wars, industrial companies where those considered too big to fail. Today, it is the finance industry that falls into this category. If the government acts on its desire to “seize” control of these businesses, we are tending to the statist corporate structure that characterized Germany in the 1920’s and 30’s.

For those who think this is new with the Obama administration, recognize that there has been long-standing inter-marriage between the business world and the State and Defense departments (a quick review of the boards of directors of large industrial companies such as Bectel, Halliburton show names like Casper Weinburger, George Shultz, and many more in Republican, as well as prior Democratic administrations whose connections to business and roles in government betray an obvious conflict of interest).

Recent Treasury department heads all have been former Wall Street bankers who seem to make decisions based on what’s best for Wall Street, while sacrificing the good of the people to the interests of friends and collegues.

Thus, nationalization of the corporations (state socialism) and protecting corporations from failure because they are “too big to fail” or because they are “vital to national (read elite) interest” (economic fascism) both lead to the need for increased force and control of families, individuals, businesses, media, academia, etc., and incrementally destroy liberty, freedom, happiness, and prosperity.

Let us resist attempts by our “representatives” to increase force and control. It starts with the economy, then permeates the rest of our lives. Let us remember the words of William Butler Yeats: “The best lack all conviction, while the worst
Are full of passionate intensity”.

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