Exactly. Governments shouldn't bail out any corporation without a hefty share of ownership in exchange. We did it for Sallie Mae, and we can do it for Intel, Boeing, and the airlines.
no, we the people via our governmental apparatus should essentially force bankruptcy early enough (like the FDIC does for failing banks) and sell the assets in a widely-held auction (for fair price discovery), so that a competitor can keep customers from facing undue externalized risk, and creditors and employees can be made whole, while owners take a bath on their equity. the fundamental downside of taking risk has to exist for economies to keep moving towards efficiency (which our economy is frustratingly not because of said financializations and the like).
I agree with this sentiment. And if you let companies fail, then you open the market for leaner, meaner companies to acquire their assets and build better products.
As it is, we keep some of these giant companies on life support for years or decades, allowing them to crowd out competition with their sheer size, while also failing to really produce good products that serve their customers.
The thing is the downside of risk taking still exists. It just shifts from an individual risk(the corporation) to an existential risk(a big chunk of the economy).
The only way to prohibit this would be to cap the maximum size of a corporation. My guess is lawyers would just come up with some legal novelty to work around this in no time at all.
"...It just shifts from an individual risk(the corporation) to an existential risk(a big chunk of the economy)."
but that's the point of the early-enough forced bankruptcy - to salvage value and re-internalize the downside risk to owners only.
i'm totally down with limiting corporate size, not via a direct statute to that effect, but via a high-functioning antitrust department along with severely progressive taxes. you can get as big as you want, as long as you can internalize all the downside risk of being 'too big to fail'.
We need to enforce antitrust laws, or make new laws if those aren’t sufficient. Large companies have insane levels of control over our lives, and it’s not healthy for society. Just look at Facebook and Google’s stranglehold on information, or Apple’s 30% fees on most iOS app revenue.
This approach suffers from the same fundamental problem as the comparative advantage argument - that there is an infinite reservoir of companies that can immediately rehire the now laid-off talent at equal or better productivity
Real world doesn't work that way. Real world looks much more like the deindustrialized parts of the UK or the US, or the collapse of Soviet economy after switching to capitalism. Companies go bust, taking the whole supply chain with them, workers are laid off and disperse. After a few years, the skills atrophy and the experience vanishes - you cannot put humpty dumpty back together again. More often than not, the workers stay unemployed, underemployed, or just cheat disability. In high-end consolidated markets like semiconductors or aircraft manufacturing, we're not talking about an infinite reservoir, it's a handful of corporations per continent
bankruptcy saves more of those jobs than letting a company dissolve completely, because the company is allowed to shed debt (and equity) and reorganize. it’s also better than nationalizing, because it preserves the profit motive that is better at ensuring the company will stay/become competitive and survive in the long term without government support.
i’m totally good with throwing out the senior leadership and letting new leadership grow from within though. claw back their bonuses and golden parachutes too.
Why would the government take on actual work which they would promptly fail at and profits would soon go to zero ? They can just keep on collecting the sweet 21% corporate tax in addition to payroll taxes and income taxes on all the employees instead.
