Comments on: Too Big to Fail = Big Enough to Regulate http://socratesvotes.com/2009/03/27/too-big-to-fail-big-enough-to-regulate/ Political Philosophy and Applied Ethics for Regular Folks Sat, 14 Aug 2010 04:32:40 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Matteson http://socratesvotes.com/2009/03/27/too-big-to-fail-big-enough-to-regulate/comment-page-1/#comment-2140 Matteson Sun, 19 Apr 2009 00:35:03 +0000 http://socratesvotes.com/?p=566#comment-2140 Well, the difference here is one of scope. It's unfortunate when a smallish company or corp fails and puts people out of work, but it's not unacceptable. It's just how the market works. The companies which ought to be regulated are those that are so large that their failure would put something 266,000 people (GM's # of employees according to Fortune) out of work all at once. The failure of a corp like GM could have unacceptable human costs to the areas around their plants. We're not concerned with the average forest fire. We might be very concerned with one that would wipe out an ecosystem or a city. Well, the difference here is one of scope. It’s unfortunate when a smallish company or corp fails and puts people out of work, but it’s not unacceptable. It’s just how the market works.

The companies which ought to be regulated are those that are so large that their failure would put something 266,000 people (GM’s # of employees according to Fortune) out of work all at once. The failure of a corp like GM could have unacceptable human costs to the areas around their plants.

We’re not concerned with the average forest fire. We might be very concerned with one that would wipe out an ecosystem or a city.

]]> By: Ed Gonzalez http://socratesvotes.com/2009/03/27/too-big-to-fail-big-enough-to-regulate/comment-page-1/#comment-2111 Ed Gonzalez Sat, 18 Apr 2009 06:31:06 +0000 http://socratesvotes.com/?p=566#comment-2111 By the same logic, wouldn't every business entity that could fail and potentially harm a similar number of people be regulated? In the A-B argument, it was A's potential to hurt B, not necessarily A's faltering behavior, that warranted regulation for A. Weapons are regulated based on their potential for damage first, (as in the nuclear weapon example you gave), then by the owner's perceived level of stability (like hand guns). Similarly, companies should be regulated by their potential for damage and not their perceived level of stability. Following this logic, lots of other large companies that are doing relatively well should be regulated to ensure they do not harm the world economy. Should we begin to regulate companies in foreign countries that have a significant impact on our economy? Several car and electronics manufacturers come to mind, as well as a few import beers I would like to stick around. ----- Here is where I think the weapon analogy breaks down. There is little to nothing one can do if a neighbor sets off a nuclear weapon. However, we've seen faltering companies, even large ones, bought by other companies. We've seen faltering companies replaced by new comers. We've seen faltering companies recover. Who is to say that certain large companies failing is not a part of a healthy financial ecosystem. Forest fires are as much a part of a healthy ecosystem as rain. By the same logic, wouldn’t every business entity that could fail and potentially harm a similar number of people be regulated? In the A-B argument, it was A’s potential to hurt B, not necessarily A’s faltering behavior, that warranted regulation for A. Weapons are regulated based on their potential for damage first, (as in the nuclear weapon example you gave), then by the owner’s perceived level of stability (like hand guns). Similarly, companies should be regulated by their potential for damage and not their perceived level of stability.

Following this logic, lots of other large companies that are doing relatively well should be regulated to ensure they do not harm the world economy. Should we begin to regulate companies in foreign countries that have a significant impact on our economy? Several car and electronics manufacturers come to mind, as well as a few import beers I would like to stick around.

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Here is where I think the weapon analogy breaks down. There is little to nothing one can do if a neighbor sets off a nuclear weapon. However, we’ve seen faltering companies, even large ones, bought by other companies. We’ve seen faltering companies replaced by new comers. We’ve seen faltering companies recover. Who is to say that certain large companies failing is not a part of a healthy financial ecosystem. Forest fires are as much a part of a healthy ecosystem as rain.

]]> By: Matteson http://socratesvotes.com/2009/03/27/too-big-to-fail-big-enough-to-regulate/comment-page-1/#comment-1556 Matteson Tue, 31 Mar 2009 13:46:19 +0000 http://socratesvotes.com/?p=566#comment-1556 Yep. I agree with you on that one. It grates my Libertarian hide, but I agree. If some corporation or business gets so large that the human cost of their failure is unacceptable then it is the job of the State to regulate them. I would object if the regulation was such that the State benefits monetarily from that regulation, but they have a responsibility to protect us to some extent. One small quibble about your argument is that "when A’s behavior threatens not only to harm A, but B as well, B should be able to limit said behavior" is not quite right. The second "B" should be "the State." I don't get to regulate my neighbors unless I'm in some sort of anarchy. -Mike Yep. I agree with you on that one. It grates my Libertarian hide, but I agree. If some corporation or business gets so large that the human cost of their failure is unacceptable then it is the job of the State to regulate them. I would object if the regulation was such that the State benefits monetarily from that regulation, but they have a responsibility to protect us to some extent.

One small quibble about your argument is that “when A’s behavior threatens not only to harm A, but B as well, B should be able to limit said behavior” is not quite right. The second “B” should be “the State.” I don’t get to regulate my neighbors unless I’m in some sort of anarchy.

-Mike

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