A worldwide forest fire
We need a worldwide forest fire. Now, I am not being literal, as you may have guessed. The worldwide economy needs the equivalent of a forest fire—a dismantling to save it, if you will. Now I am nearly positive that you have seen or heard of this idea before, but I think this is a truly ingenious principle.
Consider the world economy as it is today. Currently each market is typically ruled by a select number of companies or organizations. Regardless of how these companies have come to their current position, they are now enormous. Such companies include Wal-Mart, Microsoft, McDonald’s, etc. If you compare the current economy to the economy of decades earlier, you can see that now these companies are able to dictate a relatively huge portion of economic decisions, including methods of production and the items that are produced. Placing their political implications aside, these corporations have an absolutely massive impact on what happens to the world economy.
With these things in mind, I would like to make a few points. Because they are so dominant in their industries, their mere existence in a local market stamps out all competition. At this point, this implies two things: there is either an inherent monopoly in a large company’s industry (e.g. Microsoft), and now the consumer (or the “normal citizen”) has lost a large portion of his choice that he used to enjoy. As a result, a vast majority of the world is now operating under the (benevolent) dictatorship of these monopolies.
Here comes the money. When a company continues to grow in market area, its income is obviously significantly increased. As a result, it can continue to expand in both size and power. Unfortunately, as we have seen, a capitalistic world is driven by money, whether in politics or otherwise. Even more unfortunate is that people are so easily influenced by money, and as a result we see that large companies have a huge influence on big government. When you combine big companies with big government, you can only expect to receive some pretty big problems.
With our current economic state, the term “bailout” has become more and more familiar. Just what does a bailout do, exactly? The expressed purpose of a bailout is to prevent companies that are “too big to fail” from failing. In other words, the government has determined that companies like AIG and General Motors are more important than American citizens (because, of course, bailouts come from tax dollars). Now big companies that have received government funding are debtors to the government and are now truly too big to fail. If General Motors failed today, I daresay there would be riots in the streets—and rightfully so.
Up to this point, I suspect that I have merely expressed what you have probably already heard. Consider banking for a moment. With systems such as the Troubled Asset Relief Program (TARP), the practices of big banks are encouraged. If the government treated everyone the same way, there would be no failing businesses. Ancient business models would remain simply because we are afraid of failure. It is important to recognize that while the initial pain of the failure of a business will be difficult to handle, the outcome afterward will provide an important pruning service of sorts. Economic cycles are natural and are actually important in removing the unimportant and ushering in the best, most competitive, and most advanced. And, of course, when monopolies exist, failures act as an important method of wiping the slate clean.
I think that regardless of what exactly happens to a failing business or business model, the importance of not favoring certain companies over others is absolutely paramount. Without it, competition cannot exist. When the government hoists large companies over small companies, there is no possible way to compete—especially when government funding allows these companies to lower their prices drastically.
Nothing is too big to fail. Government and businesses alike have a huge amount of power over us—the “little people.” Although we tend to enjoy our conveniences, sometimes it is best to sacrifice in order to progress—both personally and as a society.
