More on failure

August 24, 2010

If, as I said in my last post, you’re not free if you’re not free to fail, what does it mean when institutions are proclaimed “too big to fail?” If there really are such institutions, then we aren’t as free as we should be.

I remember reading a blog near the beginning of the current financial collapse that was pointing to the bankruptcies as “failures of capitalism.” But bankruptcy is one of capitalism’s main tools for optimizing the allocation of economic resources; if no one’s going bankrupt then something is preventing capitalism from working.

As disruptive as the collapse of major financial organizations and automakers would have been, I can shake the suspicion that we’d have been better off in the long run if they had been free to fail.

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One Response to “More on failure”

  1. Rachelle Says:

    I totally agree!


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