Capitalism rewards successful innovation and efficiency; saving what has rotted is antithetical. I realize, of course, that by the time AIG was infused, there may have been no choice. GM, on the other hand, may have been DOA. This week, according to The New York Times, auditors expressed “substantial doubt'” about GM’s ability to survive “even if it received all $30 billion it hoped to borrow from the federal government.”
The past is past; I am now talking prospectively.
Corporations, sine qua nons of capitalism, reward their stockholders and employees though policies that seek growth and accumulation of profit. Although we have anti-trust laws to prevent over-concentration of corporate power, “free market” advocates abhor governmental intervention, and in recent years, they have gutted regulation.
But there are benefits to splitting up behemoths. Our communication system was actually improved, and innovation was spurred, when in 1984 AT&T was forced to split into seven independent companies.
A corporate monster will not voluntarily watch its weight. Keeping the leviathan from selfishly overeating and destroying the loch is our government’s job.
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3/16/09 follow up: A shorter version of the above appeared in print today as a San Francisco Chronicle letter to the editor.