Posted tagged ‘taxpayers’

Too big not to fail

March 27, 2009

As noted below (in December, on an earlier version of this blog), I was in favor of helping GM get through this mess, within limits. GM and the country have reached that limit. Throwing at it the amount of money it probably needs, on top of the ridiculous amounts of money the government — that is, the taxpayers — is or will be tossing around, is just too much. It will be tough for GM to reorganize under bankruptcy but it will be tougher in the long run for all of us if we go into even more debt as a nation.

And while we’re at it, if we’re going to regulate anything, let’s ban the phrase “too big to fail.” It’s truly become an excuse to not face the market music. This is not a slam on GM or any other company. Sometimes a company can make all the right moves and still fail. But just as a business can ride high on the market (I’m assuming good products and services here), it must accept the consequences when the market changes. If it is unable or unwilling to adapt, so be it.

“Too big to fail” has essentially become “too big to care” or “too big to change.” What it means today is that a company became, in effect, too big to succeed. It lost its way, for whatever reason. Companies let employees go when they are unproductive and/or unaffordable. The taxpayers have to do the same for companies.